Australia’s NAB Business Confidence Index reported a decline in May, dropping from 0 to -4. Furthermore, Business Conditions witnessed a significant drop from 15 to 8. Looking at some details, trading conditions fell from 22 to 14, profitability conditions went down from 12 to 7, and employment conditions also experienced a drop, going from 11 to 4.
“Business conditions recorded a solid decline in May, and it appears the gradual easing we have seen through early 2023 appears to be strengthening,” said NAB Chief Economist Alan Oster. “That said, conditions remain above average reflecting just how strong the economy was through 2022.”
Oster highlighted that “all three sub-components eased in the month, suggesting that demand growth is now moderating, and trading conditions, profitability and employment are beginning to reflect this.”
Business confidence fell back into the negative zone, oscillating within the 0 to -4 index point range in recent months. “Our bigger worry is the sharp decline in forward orders in the month,” Oster noted.
Meanwhile, price measures inched upwards again, yet they remain notably below their mid-2022 peaks. “The trend over the coming months will be important as the RBA tries to assess whether it has done enough and if underlying inflation pressures are easing in a timely way,” Oster noted.
