By Stuart Condie
SYDNEY–Australian business activity moderated in September but remained broadly resilient amid signs that some inflationary forces could be moderating.
National Australia Bank’s business conditions index edged down to +11 points in September from +13 in August. This is still above average levels, NAB Chief Economist Alan Oster said on Tuesday.
“The conditions index has been hovering around its current level of +11 index points since May, suggesting the economy has remained in reasonable shape through the middle of the year,” Oster said.
Business confidence remained steady, albeit below average levels. Confidence has been broadly neutral for several months, which may indicate that businesses are less concerned about the outlook despite the increasing likelihood that interest rates could remain elevated for longer than previously expected.
The Reserve Bank of Australia has held the country’s cash rate for four consecutive months after raising it by 400 basis points over a little more than a year. It has warned that further increases remain possible.
The survey contained some positive signs that inflation may be moderating, with labor costs growth easing to a quarterly 2.0% from 3.2% in August and from 4.0% in July.
Purchase costs growth also fell to 1.8% in September from 2.9% the previous month.
“The momentum of some of the key cost pressures driving inflation may have started to step back in a welcome sign for the broader inflation outlook,” said Oster, while warning that September-quarter inflation in energy, rents and services prices will remain strong.
The Australian Bureau of Statistics is due to publish quarterly inflation data on Oct. 25.
Write to Stuart Condie at [email protected]
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