SYDNEY: A measure of Australian business conditions slipped to a six-year low in October as forward orders plunged, pointing to slowing domestic demand amid higher borrowing costs and elevated cost pressures, a survey showed on Tuesday.
The National Australia Bank survey's index of business conditions fell by 1 point to -2 in October, the lowest level since August 2020. Its index of confidence also fell by a point to -15, far below the long-run average of +5.
"Business conditions have continued to gradually trend lower over recent months, suggesting that growth has slowed further in the second half of 2026 from the already slower pace seen in the first half," NAB said.
"For the RBA, the survey reflects the challenge at hand. Cost pressure remains a serious risk to the inflation outlook, but growth is slowing and there are risks that labour demand may soften going forward."
The Reserve Bank of Australia has raised interest rates five times this year to an 18-year high of 4.85% in the face of stubbornly high inflation. An underlying measure of price pressures was running at an annual 3.6% in September, well above the target band of 2% to 3%.
The retail industry reported the weakest confidence, conditions and forward orders, NAB noted, while the construction sector also looked to be softening after having held up well this year.
The survey found measures of costs remained elevated, with purchase cost growth picking up 0.1 percentage points to a quarterly rate of 2.4%. - Reuters
