• Thu. Feb 29th, 2024

Australia’s Economy Slows Down in January, Business Confidence and Sales Ease Up but Capacity Utilization and Costs Increase

ByEditor

Feb 13, 2024
In January, Australian business conditions weaken, costs become an issue

In January, business conditions in Australia softened, with the service sector experiencing a slowdown. This led to a decrease in the index of business conditions to +6, just below its long-run average of +7. Despite this, the measure of business confidence increased by 1 point to +1, following a 7-point rebound in December.

According to NAB’s chief economist Alan Oster, confidence remains weak due to ongoing pressures across the economy, including slowing growth and high cost growth. The survey revealed that business sales eased 3 points to +11, while both profitability and employment dipped 2 points to +5. Capacity utilization also picked up to 83.6% from 82.8%.

In terms of costs, the survey showed that quarterly growth in purchase costs edged up to 1.8% in January, while growth in retail prices rebounded to +0.9% from +0.5% in December. Oster mentioned that despite these price pressures remaining solid, they are expected to ease in early 2024 as the economy continues to slow.

The Reserve Bank of Australia (RBA) has responded to these economic conditions by raising interest rates to a 12-year peak of 4.35% in an effort to restrain inflation

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