In May Australia’s business confidence fell back into negative territory, declining by 4 points to minus 3 index points according to the NAB Monthly Business Survey. This drop indicates that the subdued economic activity seen in Q1 GDP data has carried over into Q2. Confidence dropped notably in manufacturing and wholesale sectors, while remaining negative in retail and wholesale.
Overall business conditions decreased slightly to 6 index points, just below the long-run average. Employment improved by 3 points to 5 index points, while trading conditions and profitability both declined by 3 points. Retail conditions saw a significant drop of 7 points, but wholesale and manufacturing industries experienced increases of 9 and 5 points respectively. Retail conditions remained negative while other industries stayed positive.
Overall, economic conditions varied across different Australian states with little change in the eastern states but a sharp decline in Tasmania, Western Australia, and South Australia. Western Australia and Tasmania continued to have higher trend conditions while Victoria showed the softest trend at 2 index points. Forward orders increased slightly, while capital expenditure decreased and capacity utilization rose slightly.
Labour cost, purchase cost, product price, and retail price all saw an increase in growth rates in the latest data. Labour costs rose to 2.3%, purchase costs to 1.9%, product prices to 1.1%, and retail prices to 1.6% compared to the previous month.
