SYDNEY- Australian business conditions rebounded in February as sales and profits picked up, a survey showed on Tuesday, while retail prices jumped in a possible red flag to progress on slowing inflation.
The survey from National Australia Bank (NAB) showed its index of business conditions rose 3 points to +10, taking it back above the long-run average of +7.
Its volatile measure of business confidence dipped 1 point to 0, with the retail sector a major drag as high mortgage rates and past inflation weighed on incomes.
The survey’s measure of business sales climbed 5 points to +14, while profitability rose 3 points to +9 and employment added 1 point to +6. Capacity utilization dipped to 83.4 percent , from 83.7 percent .
“It is really too early to say if this is just a temporary lift or the beginning of a more meaningful turnaround,” said NAB’s chief economist Alan Oster.
He noted activity was still strong in services sectors such as transport, recreation & personal services and finance, business & property, but weak in retail and construction.
“Cost pressures clearly remain elevated for businesses and it appears there is still some scope for firms to pass this through to output prices,” added Oster.
Quarterly growth in purchase costs rose 1.8 percent in February. Growth in retail prices rebounded to +1.4 percent from +0.9 percent , undoing some of the easing in goods prices seen over December and January.
