SYDNEY (Reuters) -Australian business activity rebounded sharply in June as firms reported rising sales and profitability, a survey showed on Tuesday, offering hope demand was finally benefiting from lower borrowing costs and cooling inflation.
National Australia Bank’s survey showed its index of business conditions climbed to +9 in June, from zero in May, topping the long average of around +6. Its confidence index also increased 3 points to +5, for the third month of gains.
“While we wouldn’t overplay monthly moves, the uptick in trend conditions is welcome given the softening trend through early 2025,” said NAB’s chief economist, Sally Auld.
“An improvement in confidence is also welcome, given the raft of negative headlines globally over recent months.”
The survey’s measure of business sales jumped 10 points to +15, while profitability rose 9 points to +4 and employment gained 2 points to +3. By sector, manufacturing and retail saw the largest increases following large falls in May.
The improvement in retail is welcome as consumer demand has struggled all year despite two cuts in interest rates and a slowdown in inflation.
The Reserve Bank of Australia meets on Tuesday and is widely expected to again cut rates by a quarter point, to 3.60%.
Markets are wagering on further easing to 3.10% or lower, since core inflation has dropped to the middle of the RBA’s target band of 2% to 3%.
NAB’s survey showed growth in retail prices had slowed to a quarterly pace of 0.6% in June, the lowest since early 2023, even as purchase costs stayed up at 1.5%, pointing to some pressure on margins.
(Reporting by Wayne Cole; Editing by Clarence Fernandez)
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