SYDNEY, Feb 14 (Reuters) - Australian business
conditions rebounded sharply in January after three months of
slowdown while cost pressures picked up again, a surprising sign
of strength that could add to the case for yet more rises in
interest rates.
Tuesday's survey from National Australia Bank Ltd (NAB) showed its index of business conditions had risen 5
points to +18 in January, well above its long-run average.
The measure of confidence climbed 6 points to +6, led by
gains in the wholesale and the transport and utilities
industries.
"The improvement in confidence suggest firms have a more
optimistic outlook as concerns about global growth prospects
ease, while strong conditions are also providing evidence that
the economy is more resilient than previously expected," said
Alan Oster, NAB's chief economist.
The survey showed a notable 8-point pick-up in its sales
index to a very high +28 in January, supported by historically
low unemployment and rapid population growth.
Measures of employment edged up 2 points to +10, while
profitability rose 4 points to +17.
The resilience of demand was one reason the Reserve Bank of
Australia (RBA) lifted interest rates to a decade high of 3.35%
last week and warned further increases would be necessary to
contain inflationary pressures.
The NAB survey showed labour costs in November to January
had been 2.7% higher than in August-October, when they were up
2.1% from the previous three months. The latest rise is well
down from the 4.6% peak rate seen in May-July.
Purchase costs and retail prices also picked up, but again
were well short of last year's peaks.
"From here, the pace of ongoing supply chain healing and
strength of wage growth will be important in shaping how much
further cost pressures ease, while the resilience of consumption
will continue to be tested as higher rates are passed through to
households," said Oster.
(Reporting by Wayne Cole; Editing by Bradley Perrett)
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
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