SYDNEY, Sept 11 Australian business conditions
improved in August as most firms enjoyed a rebound in sales and
profits, though confidence took a hit as miners fretted about
falling commodity prices, a survey reported on Tuesday.
National Australia Bank's main measure of business
conditions rose 4 points in August to stand at 1, so more than
recouping July's loss.
In contrast, the index of confidence fell 5 points to stand
at -2, reversing much of the improvement made the previous
month. The two measures have been see-sawing for months with no
clear trend emerging.
"Mining was the worst affected industry, with the weakened
outlook for commodity prices crunching confidence in this
sector," said NAB chief economist Alan Oster.
Spot prices for iron ore, Australia's single biggest export
earner, have fallen by a third in the past couple of months, in
part due to Chinese efforts to cut stockpiles as the economy
Yet most other sectors in the survey of over 500 firms
reported better times in August.
"The improvement was driven by broad-based improvements in
trading conditions, profitability and to a lesser extent
employment," said Oster. "Conditions improved across most
industries - with particularly strong kick ups in retail and
Consumer spending got a lift mid-year from government
payouts and a couple of interest rates cuts from the Reserve
Bank of Australia (RBA).
The survey's measure of sales rebounded by 7 points in
August to 5, while that for profitability rose 5 points to -2.
The index of employment edged up a point to stand at 0 thanks in
part to a big improvement in the wholesale sector.
Measures of price pressures in the survey remained subdued,
adding to evidence that there was still plenty of scope for the
RBA to cut rates further if needed.
Growth in labour and product costs slowed in the month while
retail prices hardly grew at all.
Oster, however, is confident enough about the economic
outlook to argue that further rate cuts will not prove
"If the RBA were to lower rates again, it would most likely
occur towards the end of this year following an unanticipated
slowing in the labour market and domestic activity," he said.
"The expected profile of growth and inflation implies that
the RBA will stay on hold until the middle of next year."
(Reporting by Wayne Cole; Editing by Lincoln Feast)