NAB reveals the latest
Business conditions in Australia softened in April, returning to long-run average levels, according to new data from the National Australia Bank (NAB).
According to the latest NAB Monthly Business Survey, all three sub-components of business conditions — employment, trading, and profitability — have normalised.
Employment notably retreated to its average, dropping five points to +2 index points, suggesting a stabilisation in the labour market after a period of significant growth. Trading conditions decreased by two points, while profitability remained unchanged.
Despite a steady business confidence index at +1, forward orders declined sharply by six points to -7, with significant decreases noted in the mining, manufacturing, and construction sectors, results of the April NAB survey showed. Retail and wholesale sectors also reported negative forward orders, reflecting ongoing challenges in these industries.
Capacity utilisation stayed consistent at 83.2%, while capital expenditure levels remained high at +8 index points, suggesting that businesses are maintaining investments despite uncertainties.
On the cost front, both labour and purchase cost growth moderated in April, and retail price growth slowed to 0.9% on a quarterly basis, down from 1.4% in the previous quarter – a positive sign for potentially easing inflation pressures as the year progresses.
According to NAB chief economist Alan Oster (pictured), the return of business conditions to their long-run averages marks a milestone after the highs of last year and reflects a broader slowdown in economic growth. He also pointed out the concerning trends in retail and the persistence of robust conditions in the services sectors, which may buffer some of the broader economic softening.
“There was some further improvement in the pace of cost growth in April, as well as a step down in the pace of retail price growth,” Oster said. “This is a hopeful sign for easing inflation in Q2, though the future remains uncertain.”
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