Business confidence improves as Middle East impact less severe than feared: NAB
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The news: Australian business confidence rose nine points in June to -5 index points, while business conditions held steady at +3 index points for a third consecutive month, according to the latest NAB monthly business survey.
The context: The survey showed business confidence continued to recover in June as concerns over the economic impact of Middle East tensions eased and cost pressures proved less severe than initially feared.
NAB chief economist Sally Auld said that while confidence remains in negative territory, businesses appear less concerned as higher fuel prices and disruption from the Middle East conflict have had a smaller impact on the Australian economy than expected. She added that confidence has recovered much of its sharp decline in March, reflecting easing concerns around energy markets and broader geopolitical risks.
The survey also pointed to a smaller-than-expected inflationary impact from the conflict, with purchase cost growth easing from its March peak, final price growth slowing and retail prices falling for the first time in seven years.
Business conditions remained below average, with employment softening slightly, profitability improving and trading conditions broadly unchanged.
What they said: “What we’re hearing from customers is that they are feeling more confident about the outlook than they were a few months ago, but price pressures remain a challenge,” NAB group executive business and private banking Andrew Auerbach said.
“Businesses are looking at every part of their operation to find savings. Some are reducing fuel and transport costs by planning routes more efficiently or investing in more fuel-efficient site equipment, while others are working closely with suppliers and customers to manage costs and keep goods moving,” he added.
The source: NAB
