Australia’s NAB Business Confidence index turned positive in May, rising from -1 to 2. However, the improvement in confidence was not matched by underlying business conditions, which weakened further. Business Conditions index slipped from 2 to 0, with trading conditions dipping slightly from 6 to 5, profitability remaining in the red at -4, and employment conditions dropping from 4 to 0 — all pointing to a stagnating environment.
On the inflation front, cost indicators presented a mixed picture. Labor cost growth remained firm at a quarterly equivalent pace of 1.7%. Purchase cost and final product price growth eased to 1.1% and 0.5%, respectively. Retail price growth held steady at 1.2%, suggesting persistent margin pressures.
NAB Chief Economist Sally Auld emphasized that business conditions are still weak and warned that continued softness could cap any recovery in confidence. She also flagged the labor market as a key area to monitor, with the employment index now below average.
Full Australia Monthly Business Survey release here.