Australia's business conditions ease in November as trading weakens

However, after adjusting for regular monthly volatility, NAB said business conditions are holding broadly steady around long-run average levels, marking an improvement from the more subdued environment seen earlier this year.

The survey aligns with Q3 national accounts data, which showed domestic demand rising a solid 1.2 per cent quarter on quarter. Consumer demand continued to expand at a firm pace, up 0.5 per cent, while business investment recorded a stronger-than-expected rebound of 3.4 per cent, Westpac said in an article authored by economist Ryan Wells.

Although much of the lift was driven by data centre fit-outs and aircraft purchases, NAB noted early indications of investment momentum broadening across consumer-facing sectors.

With evidence of recovery building, businesses have begun marking up capital expenditure plans, signalling a more confident approach towards capacity expansion. Capacity utilisation rose further to 83.6 per cent, underscoring tightening conditions as demand improves. Even so, the survey’s capex gauge has lagged the strength suggested by official investment data.

Labour market conditions remained positive but subdued. The employment sub-index edged up one point to +4, while official data pointed to diverging trends across industries. Growth in care-economy jobs has moderated from recent highs, but there are early signs of stronger hiring in consumer-oriented sectors.

Despite the improving economic backdrop, business confidence softened, slipping five points to +1 in November. NAB said the decline may be short-lived given the survey’s month-to-month volatility, particularly as forward orders remain in positive territory after a prolonged downturn, supporting evidence of firmer demand.

On inflation, labour cost pressures continued to ease, while purchase costs rose slightly. The quarterly-equivalent pace of final price growth held at 0.6 per cent, broadly consistent with underlying inflation moving towards the midpoint of the Reserve Bank of Australia’s target range, added the article.

NAB added that recent inflation increases have been driven largely by administered prices, suggesting market-driven inflation pressures remain contained.

ALCHEMPro News Desk (SG)