Demand to remain weak in 2024 first half: NAB business survey
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The news: Business conditions and confidence remain weak, and demand is set to remain subdued for the first half of the year, NAB economists say. The bank's quarterly business survey found conditions are easing, but the Australian economy is not out of the woods yet.
The numbers: Business conditions fell four index points points to +9 in the December quarter, with drops in all three sub-categories of trading conditions, profitability and employment. Business confidence dropped 4 points to -6 index points, and retail confidence remains very weak at -20 index points.
Labour cost growth was 1.2%, down from 1.8% in in the previous quarter. Final product price growth eased from 0.9% to 0.7%, and retail price growth also rolled over to 0.9% from 1.1%.
The context: While December's quarterly inflation print showed price growth is heading in the right direction, relief on interest rates is not expected until later in 2024. Cost pressures on businesses are continuing to ease, but labour availability, wage pressures and weaker demand will continue to weigh on the economy.
What they said: "Notably, the slowdown in demand has meant firms appear to have had less scope to pass on costs to consumers," said Alan Oster, NAB's chief economist. "Survey measures of price growth eased in Q4 – in line with the easing seen in the CPI – and pressure on margins is the second top issue for businesses. This will be a key challenge for businesses to navigate in 2024 as we expect demand to remain subdued, at least through the first half of the year."
The source: NAB Media Release
