“After a volatile but soft year for business confidence, we have seen a trend improvement over the past three months,” said Gareth Spence, head of Australian Economics at NAB. “It is now around its long-run average of 5 index points.”
The report highlighted significant gains across key subcomponents in June. Trading conditions surged 10 points, profitability increased by 8 points, and the employment index rose by 3 points. Business conditions increased sharply in the month driven by notable improvements in trading conditions and profitability,” Spence noted. “The rebound in profitability is encouraging, particularly if sustained, as there was a risk that ongoing weakness would eventually flow through to weaker hiring.”
Improvements were seen across most industries, with manufacturing and retail experiencing strong recoveries after May’s declines. However, conditions remained strongest in services such as finance, business and property, and recreation and personal sectors.
Capacity utilisation rose for the second consecutive month, reaching 83.3 per cent—well above the long-run average—while capital expenditure climbed to +10 index points. Forward orders also continued their gradual rise, though still sit just below the long-run average of 1 index point.
Input costs presented a mixed picture. Labour cost growth edged down slightly to 1.5 per cent, while purchase cost growth also stood at 1.5 per cent. Final product prices grew by 0.6 per cent, while retail price growth eased from 1 per cent to 0.6 per cent.
“The survey is encouraging that sluggish momentum in early 2025 will improve into the second half, with a notable increase in conditions in the month. An improvement in confidence is also welcome given the raft of negative headlines globally over recent months,” added Spence. “While there were large moves in the month, and we know that the monthly survey can be volatile, the hope is at least some of these trends will be sustained over coming months.”
ALCHEMPro News Desk (SG)
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