Rise in Australian trading conditions in March, inflation soars | Investment News

SYDNEY (Reuters) – A measure of Australian business conditions rebounded sharply in March as businesses recorded strong sales and labor conditions, while soaring costs pushed retail prices to the bottom. rise, a worrying sign of inflation.

Tuesday’s National Australia Bank (NAB) survey showed its business conditions index doubled to +18 in March, while confidence added 3 points to +16.

The upbeat result is likely to be welcomed by Prime Minister Scott Morrison, who is in the midst of a tough election campaign.

The survey’s sales metric jumped 13 points to +24, while profitability rose 8 points to +13. The employment index added 4 points to +12, suggesting the jobless rate will soon drop below 4% for the first time since the early 1970s.

“The improvement was largely driven by the retail sector, which saw conditions rise 23 points, along with leisure and personal services and finance, business and real estate,” the report said. NAB Chief Economist, Alan Oster.

“Confidence surged in the transportation, construction, recreation and personal services sectors.”

Measures of futures orders and business investment also picked up, suggesting that the recovery would continue.

Inflation remained a headache, with shopping costs and labor costs rising at the fastest pace in survey history, pushing up retail prices.

“The continued escalation in price growth over the past few months suggests that a strong first-quarter CPI reading is likely when released later in the month,” Oster said.

Analysts have warned that the March quarter consumer price index is likely to surprise on the upside and put pressure on the Reserve Bank of Australia (RBA) to start raising interest rates as early as June. .

A separate ANZ consumer survey released on Tuesday showed its confidence index rose 1.3% last week as petrol prices fell slightly, although they remained below average.

Inflation expectations remained elevated at 5.8%, reflecting cost of living pressures from fuel, food and housing.

All that price foam has yet to deter buyers, with the ABC’s measure of household spending intentions jumping 9.2% in March to a record high, driven by travel, transport and retail.

The strength in spending, combined with a 13-year low for unemployment, suggests that the economy as a whole put in a strong performance in the first quarter.

(Reporting by Wayne Cole; Editing by Shri Navaratnam)

Copyright 2022 Thomson Reuters.

Comments are closed.