SYDNEY, Jan 27: A measure of Australian business conditions dipped further in December as profits, sales and employment all softened, though confidence improved slightly courtesy of sharp falls in fuel costs. National Australia Bank’s monthly survey of more than 400 firms showed its index of business conditions eased a point to +4 in December, a shade below its long run average. The survey’s measure of business confidence regained a point to stand at +2, with a drop in oil boosting spirits in the transport and utilities sectors.
Its index of sales fell 2 points to +9, while profitability eased a point to +6 and employment a point to -1. The steep fall in fuel costs is also pulling down inflation and is one reason NAB expects the Reserve Bank of Australia (RBA) will join the growing club of central banks easing policy. Consumer price figures due on Wednesday are expected to show headline inflation slowed to 1.8 percent in the last quarter of 2014, from 2.3 percent the previous quarter. Underlying inflation is seen at 2.2 percent and near the floor of the RBA’s target band of 2 to 3 percent. Financial markets have moved decisively in recent weeks to price in at least one more cut in the 2.5 percent cash rate, in part due to steep falls in prices for some of Australia’s major resource exports.
The central bank holds its next policy meeting on Feb. 3 and futures imply around a one-in-three chance of a move then. (AGENCIES)
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