Mixed readings on business conditions, confidence and consumer sentiment from three key bank-led surveys for February on Tuesday.
According to a survey by ANZ Bank and pollster Roy Morgan, Australian consumer confidence slid last week after the Reserve Bank of Australia announced its 10th consecutive rise in the official cash rate, dropping 2.9 points to 77.0, its weakest result since early April 2020. The monthly survey from Westpac and the Melbourne Institute showed a sharp fall as well.
The National Australia Bank said its February business survey saw a sharp fall in confidence but conditions remained solid with little change in the high readings for trading conditions and employment.
Business confidence fell 10pts to -4 index points, after rising into positive territory in January. The fall was driven by wholesale, recreation & personal services, and finance, business & property. Across the states, confidence eased across the board but was still positive in trend terms everywhere but NSW and Qld, the NAB said.
Business conditions edged down 1pt to +17 index points in February, still a very strong level in the history of the survey. Trading conditions (+27 index points) and employment (+12) were steady at while profitability fell 4pts to +14.
“Conditions remain elevated across industries and states, with consumer-facing sectors clustered at a high level of around +20 index points and business-facing sectors clustered around +10 index points,” the NAB said.
“Price and cost growth measures also remained high in February. Labour cost growth picked up further from a brief low of 2.1% in December, now at 2.8% in quarterly terms, while purchase cost growth was steady at 3.1%, though retail price growth eased slightly.
“While we expect inflation likely peaked in Q4, price growth remains elevated and the survey suggests that while global goods-side pressures have abated somewhat, there has been less evidence of easing in services-side pressures.
NAB said it continues to expect a more material slowdown in demand, but this will likely come later in 2023 when the full effect of rate rises has passed through.
Overall, Mr Oster said the survey confirms the ongoing resilience of the economy through the first months of 2023 despite high inflation and the ongoing pass-through of higher interest rates to households.
The solid business conditions, especially employment, suggests that Thursday’s February jobs report could – because of a scrambling of data in December and January for odd reasons such as a backlog of people waiting to take up new positions – be as strong as some economists think: between 50,000 and 70,000 new jobs.
