Daily Management Review

Business activity grows in Australia


Australian businesses reported robust sales in September as a result of robust demand that surprised observers by demonstrating remarkable resistance to rising interest rates. At the same time, cost pressures on prices eased marginally, raising optimism of an inflation slowdown.

Jorge Láscar
Jorge Láscar
The Business Conditions Index, published by National Australia Bank on Tuesday, increased by 3 points to 25, which is much higher than the multi-year average. The unstable confidence indicator dropped by five points, which is quite near to the multi-year norm.

According to NAB Chief Economist Alan Oster, "the conditions indicator is currently above the pre-pandemic COVID peak." - "It demonstrates how great the current demand is."

"A greater reading was only observed on the rebound after the removal of lockdowns in early 2021, he adds - It is evident that consumers are continuing to find reasons to spend thanks to a robust labor market, substantial savings, and a more comprehensive post-pandemic recovery."

Even though the Reserve Bank of Australia has already increased interest rates by 250 basis points, to a 9-year high of 2.6%, the NAB business activity indicators have been outperforming expectations for months.

At that, last week, the RBA unexpectedly slowed the rate of rate increases to 25 basis points, stating that it wanted to maintain the economy's resilience while battling inflation.

source: ft.com