Australian business confidence bruised by coronavirus surge

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COVID-19 lockdown regulations are eased in Sydney

SYDNEY – A measure of Australian business confidence has swung into the red as a surge in coronavirus cases hit consumer spending and played havoc with staffing, though sales overall were proving resilient so far.

Tuesday’s survey from National Australia Bank (NAB) showed its index of business confidence slid 24 points to -12 in December, below the trough during the Delta wave last year.

Business conditions eased a more modest 3 points to +8, as sales held firm at +14 and profitability actually edged up a point to +10. The drag came from its measure of employment, which dropped 9 points to +2.

“It fell despite strong jobs growth reported in official data, reflecting the complexity of the labour market situation as businesses faced growing worker shortages and the prospect of a ‘shadow lockdown’ through the summer,” said NAB chief economist Alan Oster.

There were more signs of inflation in the survey as purchase costs jumped to 2.8% in quarterly terms, the highest since 2008, while growth in final product prices firmed to 1.5% and retail prices advanced 2% in quarterly terms.

Official data out on Tuesday is expected to show core inflation rose at its fastest annual pace since 2014 in the December quarter, adding to speculation the Reserve Bank of Australia (RBA) might hike interest rates as early as May.

“With significant disruption to supply chains and labour markets, price pressures are to be expected and the key question will be how quickly, if at all, these pressures abate over coming months,” said Oster.

(Reporting by Wayne Cole; Editing by Sam Holmes)