Australian Business Activity Rebounds Amidst Christmas Demand
Australian business activity witnessed a rebound in December, as Christmas demand boosted the beleaguered retail sector, according to a survey released by National Australia Bank (NAB) on Tuesday.
The NAB's index of business conditions rose 3 points to +6 in December, recovering some of November's 5-point decline. Notably, the volatile confidence index improved slightly to -2, from -3.
Sales increased by 3 points to +9, while profitability rebounded by 4 points to +4. Employment indicators also improved, with the index adding 1 point to +4.
Conditions enhanced across all industries except transport and utilities, construction, and wholesale. "Conditions remain particularly strong in services sectors," stated Alan Oster, NAB's Chief Economist. "Retail has regained positive territory for the first time since November 2023, with most industries experiencing improved business conditions."
Consumer demand struggled throughout much of the previous year due to high mortgage rates and cost of living pressures. The Reserve Bank of Australia (RBA) maintained interest rates at 4.35% throughout 2023. However, markets anticipate a possible easing of policy as early as February, aligning with a slowdown in inflation.
The NAB survey indicated an uptick in purchase costs in December, but labour cost growth slowed to a quarterly pace of 1.4% despite a tight labour market. "The moderation in labour cost growth alongside improved employment conditions suggests that wage pressures are gradually easing," commented Oster.