SYDNEY (Reuters) – An index of Australian business conditions eased modestly in July but remained at levels consistent with solid activity, while hiring intentions showed a welcome bounce, a survey showed on Tuesday.
Workers are reflected in an office building’s windows in Sydney’s Barangaroo business district in Australia’s largest city, May 8, 2017. REUTERS/Jason Reed/File Photo
The National Australia Bank’s (NAB.AX) index of business conditions dipped 2 points to +12 in July, but remained well above the long-run average of +6.
The often volatile measure of business confidence actually added a point to +7, a surprise given some other recent surveys had shown a sharp pullback in July.
The NAB survey’s measure of profitability fell 5 points to +10 in July, unwinding all of June’s jump, while its sales index eased 4 points to a still historically high +17.
In a promising development, the survey’s employment index bounced 5 points to +10.
“The employment index – based on historical patterns – is consistent with jobs growth around 23,000 per month, which should see the unemployment rate continue to edge lower over the rest of 2018,” said NAB group chief economist Alan Oster.
Official data for employment in July are due on Thursday and are forecast to show an increase of around 15,000, following a very strong gain of almost 51,000 in June.
NAB’s employment index was highest in the mining industry, followed by finance, business & property services as well as construction.
Overall business conditions improved markedly in the construction sector in July, followed by personal & recreation services and wholesale. Conditions fell in manufacturing, retail, finance, business & property and transport & utilities.
Surveyed wage and price measures rose in July, but still pointed to subdued inflation.
“The business sector looks relatively healthy, and we expect to see enough employment growth to see a gradual reduction in spare capacity, which should in time see a rise in wage growth, and a more general lift in inflation,” said Oster.
The Reserve Bank of Australia (RBA) has highlighted the strength in business conditions as it forecast economic growth would top 3 percent this year and next.
Reporting by Wayne Cole; Editing by Sam Holmes
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