FX.co ★ Australia NAB Business Conditions, Confidence Fall In October

Australia's business conditions and confidence deteriorated in October, survey results from National Australia Bank showed Tuesday.

The business conditions index dropped one point to 22 in October. Nonetheless, business conditions remained strong.

By components, trading conditions and employment eased in October but remained high. At the same time, the profitability index edged up one point.

Despite headwinds from inflation and interest rates, consumers continued to spend.

The survey showed that conditions remained strong across industries and states. The business confidence index slid four points to zero in October, which was well below the long-run average.

Confidence deteriorated sharply in transport and utilities, as well as in mining, manufacturing, finance, business & property, recreation & personal services, and wholesale.

"Despite the strength in conditions, confidence has been falling for several months as headwinds have weighed on the outlook for the global economy and Australia," NAB Chief Economist Alan Oster said.

The survey provided a mixed picture about cost measures. Purchase costs growth accelerated to 4.1 percent in quarterly terms, while labor costs growth moderated to 2.7 percent.

Inflation measures remained elevated with overall price growth currently at an unchanged 2 percent. Retail prices advanced further, to 3 percent, while price inflation for recreation & personal services slowed to 1.5 percent. The survey suggested that firms are growing wary of the potential for a slower period ahead, despite ongoing strong demand.

"A strong labour market will be an ongoing source of support for households and for now we don't foresee a recession for Australia," Oster added.