SYDNEY, May 12 (Reuters) – Australian business confidence remained mired in gloom in April, a survey showed on Tuesday, as spiking energy costs from the Middle East war squeezed profit margins and pressured investment plans.
The survey from National Australia Bank showed its index of business confidence improved only marginally to -24 in April, having dived 29 points to -29 in March, the second-largest monthly fall in history.
Its measure of business conditions fell 3 points to +3, the second-lowest reading since 2020 and the fourth straight month of decline.
“The survey suggests that rising prices and pressure on margins are beginning to affect activity and investment measures, as forward orders, capex, cash flow and employment have all fallen noticeably in recent months and are sitting well below their respective long-run averages,” said Michael Hayes, an economist at NAB.
Forward orders fell a further 4 points in April to be down 11 points since February and well below their long-run average. Capital expenditure slid 8 points in the largest such drop in the post-COVID period.
Measures of costs all rose sharply in the month, with purchase costs up 4.5% at a quarterly pace and well above selling prices at 1.8%. Retail price growth climbed to 3.2%, from 0.6%.
The Reserve Bank of Australia has raised interest rates three times in a row to reach 4.35% as it battles to control stubborn inflation. Policy makers are concerned businesses will pass on rising energy costs to consumers and stoke expectations of future inflation.
(Reporting by Wayne Cole; Editing by Edwina Gibbs)
