The latest NAB Quarterly Business Survey for the fourth quarter of 2024 shows that business conditions have remained stable as the year concluded, marking an end to a challenging period for Australian businesses.
Despite the steady conditions, there was a slight increase in business confidence, although it still lingered in negative territory, said report authors Michelle Shi (pictured above left), NAB senior economist, and Gareth Spence (pictured above right), NAB’s head of Australian economics.
This uptick in sentiment is likely fueled by the anticipated rate cuts, a rebound in consumer demand, and a slowdown in the growth of costs expected in 2025.
The NAB survey detailed no overall change in business conditions, holding at +3 index points.
A deeper look into industry specifics reveals a decline in sectors such as retail, which dropped significantly by 15 points, and finance, which decreased by 13 points.
Manufacturing and transport and utilities also saw declines, continuing a trend of weakening in manufacturing over six consecutive quarters, now standing at -21 index points.
Conversely, industries like recreation and personal services and construction experienced slight improvements.
Geographically, the state-by-state analysis showed a slight easing of conditions across most areas except for New South Wales and Tasmania. South Australia and Victoria reported more negative shifts, while Queensland and Western Australia maintained positive sentiments.
Optimism about the future appears to be growing among businesses, with a notable increase in expectations for business conditions over the next 12 months and in capital expenditure plans, NAB survey findings showed.
This forward-looking positivity contrasts with the current mixed performance across different sectors and states.
The availability of labour continued to challenge businesses, with 82% reporting it as a constraint.
However, overall labour and purchase cost pressures have begun to ease, which could signal a potential relief for businesses facing tight margins. Wage costs, however, continue to be a primary concern impacting business confidence.
Price growth in the final products remained stable with only slight adjustments in retail pricing, indicating a cautious approach to price changes amid ongoing economic uncertainty.
The overall final product price growth was unchanged at 0.4% quarter-on-quarter, with retail prices rising by 0.5%, a decrease from the previous survey’s 0.7%, NAB reported.
Access the NAB Quarterly Business Survey here.
