Australia Business Conditions In December Remain Moderate With Easing Cost Pressure

Australia Business Conditions In December Remain Moderate With Easing Cost Pressure by Ashly Chole last updated on January 30, 2023

Australia's Business Conditions In December Remain Moderate With Easing Cost Pressure

Australia's business conditions data for December remains moderate. This makes the 3rd month in a row in which the business conditions remain moderate. In addition, the price pressure is also slowing down since inflation has formed a peak.

According to experts, these results from Australia will give more breathing room to the Reserve Bank of Australia. In the end, the central bank will have fewer reasons to introduce a new rate hike. And even if we do get a rate hike, the chances of it being a bigger one will be very low.

As per the survey, the business conditions were +12 points during December. When compared with the average value over the long run, it still remains well above!

Confidence Also Improved

The confidence also saw a marginal improvement by jumping 3 points. The final value of confidence was -1, as revealed in the survey. As per the data, this is the 2nd month in a row that the confidence is still in negative territory. But when compared with its improvement in December, it is definitely improving little by little.

Overall, the recent survey is painting a healthy picture of Australia's economy and showing signs of resilience.

Another important reading revealed by the survey was the inflation in Australia. According to the survey, inflation is indeed slowing down, but it will be up to the RBA to make the final decision on a rate hike.

So far, the markets are pricing in another rate hike to the central bank's cash rate. But there is also a 40% chance that the RBA will pause its rate hike cycle.

If we compare the interest rate from the current value to last May, an increase of 300 basis points has occurred. For many, this is enough to stop inflation in the country.

As per a poll of economists, consumer prices in the last quarter were around 7.5% higher than last year. So even on that front, the inflation is still below the peak inflation rate set by RBA.