Australian Business Confidence Rebounds in October

SYDNEY (Reuters) – Australian business confidence rebounded to its highest in almost two years in October as sales proved resilient and pressure on input costs eased, a survey showed on Tuesday.

The survey from National Australia Bank (OTC:NABZY) (NAB) indicated that its index of business conditions held at +7 in October. The more volatile confidence index climbed 7 points to +5, marking its highest reading since early 2023.

Sales recorded a 1 point rise to a strong +13 in the month, while profitability remained steady at +5. Employment intentions experienced a dip of 2 points, landing at +3.

"Confidence spiked in the month after an extended period of below-average readings," said Gareth Spence, NAB's head of Australian economics. "While this is just one month, it is an encouraging sign alongside a tentative improvement in forward orders."

This improvement coincided with a separate survey of consumer confidence from Westpac, which showed a second month of strong gains in November, partly due to hopes for lower borrowing costs.

The Reserve Bank of Australia has maintained interest rates at 4.35% for a full year, with financial markets anticipating that the next move will be a reduction, although this is not expected for a few months.

Measures of cost pressures in the NAB survey suggested that inflation is slowly easing. The growth in input costs slowed to a quarterly pace of 0.9%, down from 1.3% in September. Additionally, growth in labor costs eased to 1.4%, from 1.9%, and product prices decreased to 0.5%, down from 0.6%.

Spence noted, "The survey, like other price indicators, continues to suggest an ongoing gradual easing in inflation pressure, but there is still some way to go in the moderation."

The official measure of consumer price inflation slowed sharply to 2.8% in the September quarter, largely influenced by temporary government rebates on electricity bills.