SYDNEY (Reuters) – Australian business conditions were little changed in March as sales and employment held steady in the face of decade-high interest rates, a survey showed on Tuesday, while price pressures eased slightly from elevated levels.
The survey from the National Australia Bank (OTC:) (NAB) showed its index of business conditions dipped 1 point to +9, continuing its trend of above-average activity for much of the past year.
Its volatile measure of business confidence rose 1 point to +1.
The survey’s measure of business sales held steady at +14 and employment remained unchanged at +6, although profitability fell 4 points to +6.
Capacity utilisation dipped to 83.2%, from 83.4%, suggesting supply and demand are coming into better balance, albeit at an incremental pace.
“Fundamentally, it tells us that firms have continued to be a bit concerned about the outlook even as the economy has remained resilient,” said NAB’s chief economist Alan Oster, adding that there was some positive news in the retail and construction sectors for the month.
Quarterly growth in retail prices eased to a still elevated 1.3%, after jumping to 1.4% in February in a possible red-flag on the persistence of inflation pressures. Growth in purchase costs fell to 1.4% from 1.8%.
“This aligns with our expectation that progress on bringing inflation back to target will be gradual from here, and we expect that to be further reinforced by the Q1 CPI result later in April,” said Oster.
The Reserve Bank of Australia (RBA) left interest rates unchanged at 4.35% last month and softened its stance by dropping a tightening bias. However, it did not rule anything in or out on policy.
Markets are wagering that rates have peaked but any relief won’t come until around November.