Australia's business pulse strengthens in August 2023: NAB survey

13 Sep '23

2 min read

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Insights

Australia's business conditions strengthened in August, rising 3 points to 13 index points, driven by gains in trading, profitability, and employment.
While manufacturing soared, wholesale dipped.
The economy remained resilient with positive GDP growth continuing into Q3, despite mixed results in business confidence across various states.

Business conditions in Australia exhibited strengthening trends in August 2023, rising 3 points to settle at 13 index points, according to the National Australia Bank (NAB) Monthly Business Survey for August 2023. This was primarily due to upticks in all three sub-components—trading conditions augmenting by one point to 18 index points, profitability scaling up by 2 points to 13 index points, and employment rising 3 points to attain 9 index points. These readings showcase that the conditions are well above the long-run average levels in trend terms.

Sector-wise, manufacturing took the lead by soaring 18 points. However, a dip of 16 points was noted in the wholesale conditions, while minor increments were spotted in most other industries. The range for other sectors hovered between 9 to 14 index points.

An overview of the situation state-wise presents a mixed picture. Tasmania witnessed a decline of 16 points, a sentiment echoed in New South Wales and South Australia too. Queensland and Victoria experienced elevations by 10 and 8 points, respectively. South Australia lingered on the softer side, marking 4 index points, as per the NAB survey.

Business confidence managed to edge upwards, touching 2 index points, albeit with mixed responses across sectors. Retail remained in the weakest bracket registering minus 14 points. Among the states, Tasmania recorded the lowest figures, with Queensland and Victoria also in the negative trajectory.

Delving into leading indicators, a betterment was noticed with forward orders enhancing by a point to reach 0 index points, and capacity utilisation escalating to 85.1 per cent. Despite this increment, the forward orders remained in negative territory over the month. Retail appeared to be a significant contributor to this downward pull.

Pricing dynamics revealed a mix; labour cost growth retracted to 3.2 per cent in quarterly terms, thereby partially offsetting the July spike. The purchase cost remained stable at 2.9 per cent, although construction and wholesale witnessed considerable hikes. A slight regression was noted in output price growth, landing at 1.7 per cent due to a retail sector softening which was 1.9 per cent in quarterly terms.

Reaffirming a resilient economy in Q3, the findings resonate well with the recently released National Accounts data, indicating that the subdued yet positive GDP growth of Q2 continues to sustain.

Fibre2Fashion News Desk (DP)

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