Australian businesses resilient despite challenges: Survey

13 Apr '23

2 min read

Pic: Shutterstock/fiphoto

Insights

Business conditions in Australia remain strong, although they eased slightly in March, according to a recent survey.
Price and cost growth measures showed some easing in March, indicating that inflation likely peaked in Q4 2022.
The survey's leading indicators were little changed, with forward orders inching higher, and capacity utilisation at 85.1 per cent.

Australian businesses continue to show resilience in the face of ongoing challenges, with conditions remaining well above the long-run average in March 2023, as per a recent survey. While business conditions eased 2 points to 16 index points, they remain very elevated, indicating strong demand across states and sectors.

Despite some stabilisation, business confidence remains below its long-run averages at -1 index points, particularly in the retail and wholesale sectors where the negatives are more pronounced. However, there has been a broad-based lift in confidence, led by manufacturing, according to the Quarterly NAB Business Survey March 2023.

Importantly, price and cost growth measures showed some easing in March, with both labour cost growth and purchase cost growth easing after holding up at very high levels in January and February. Output price growth measures also ticked lower, although they remain well above ‘normal’ rates of growth.

These results support expectations that inflation likely peaked in the fourth quarter (Q4) of 2022, with the full Q1 consumer price index (CPI) set to show some improvement when the data is released later in April. However, the rate of price growth and underlying pressures remains well above ‘normal’ levels, and any moderation in inflation is likely to be gradual.

Across the states, conditions were significantly lower in Tasmania, Queensland, and South Australia, but all had been at very high levels in February. Conditions in New South Wales also eased slightly while Victoria saw a rise. Conditions continued to be robust across all states in terms of trends.

Despite these positive signs, the survey's leading indicators were little changed. Forward orders inched higher, up 1 point to 4 index points as much of the February fall in wholesale was reversed. Capacity utilisation was at 85.1 per cent.

Fibre2Fashion News Desk (NB)

More Textiles News - Australia...