Soaring inflation and 11 interest rate rises have pushed business conditions to their lowest level since early 2022, with a decline in forward orders and below-average confidence painting a gloomy outlook for the business sector.
The decline in the headline figure was driven by a 4-point drop in the trading conditions sub-index, while firm profitability dipped by 2 points.Advertisement Westpac senior economist Andrew Hanlan said the business mood was particularly pessimistic in consumer-facing sectors, with“The flow of forward orders has dried up as the economy slows and lacks momentum – that is in stark contrast to the sustained strength in new orders through October 2021 to October 2022 during the reopening phase,” Mr Hanlan said.
Survey measures of inflation have also eased in recent months, with growth in labour costs and purchase costs both well below the elevated levels reached in mid-to-late 2022.