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Australian Business Confidence Improves Slightly But Conditions Remain Weak

In the last month of the previous year, Australia experienced a slight improvement in business confidence while business conditions continued to ease.


According to a survey by National Australia Bank Ltd. released on Tuesday, business confidence slightly improved, reaching minus-1 from -8 the month before. Meanwhile, business conditions—a metric that evaluates sales, employment, and profitability—fell by 2 points, settling at 7 in December.


Our Take: As the year drew to a close, economic growth moderated, feeling the pinch from the series of interest rate increases. However, recent indications of easing inflation have begun to bolster business confidence, signaling that the climax of the interest rate hike cycle may be imminent. Next RBA policy meeting is on Feb5-6, where we think it is a close call now if the last hike was behind us or if one more hike is forthcoming.


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