Australia's business conditions ease in April 2024

By industry, the decline in business conditions was most prominent in wholesale, which fell by 3 points, and manufacturing, which dropped by 2 points. Retail conditions remained steady.

The most significant shift was observed in the employment index, which fell back to average levels at 2 index points after a period of persistent outperformance in the labour market. Although this measure is not indicating outright declines in employment, the change is noteworthy. Forward orders experienced a significant drop, driven by large movements in manufacturing, with negative levels also noted in retail and wholesale sectors, as per the survey.

Despite these declines, capacity utilisation remained unchanged and above average at 83.2 per cent, while capital expenditure (capex) stayed elevated at 8 index points. These figures suggest some resilience in the broader economic activity.

In terms of costs, the survey reported some moderation. Labour cost growth eased to 1.5 per cent in quarterly equivalent terms, down from 1.7 per cent. Purchase cost growth also slowed to 1.2 per cent from 1.5 per cent. Retail price growth saw a notable slowdown, easing to 0.9 per cent from the strong 1.4 per cent seen in Q1. This moderation in costs and price growth supports the outlook for a gradual improvement in inflation, although the pace of this improvement remains uncertain.

On a state level, conditions improved significantly in Tasmania and South Australia, both up by 17 points, and also rose in New South Wales. However, conditions declined in other states, with Victoria being the softest at 3 index points. In trend terms, Western Australia and Tasmania continue to perform well, while most states maintain reasonable levels.

Fibre2Fashion News Desk (DP)