Australian businesses suffer from Omicron blues in January – survey

Tennis – Australian Open – Melbourne Park, Melbourne, Australia, February 13, 2021 General view of a closed merchandise store in Melbourne Park. REUTERS/Asanka Brendon Ratnayake

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SYDNEY, Feb 8 (Reuters) – A measure of Australian business conditions deteriorated in January as a rise in coronavirus cases hit consumer spending, although businesses were optimistic the hit would be short-lived .

Tuesday’s survey from the National Australia Bank (NAB) (NAB.AX) showed its trading conditions index fell 5 points to +3 in January, as sales halved to +7 and the profitability fell 8 points to +2. Its employment measure fell 3 points to -1.

The confidence index rebounded to +3, after plunging 24 points in December to -12.

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“Confidence fell sharply in December when the Omicron variant started to spread, but rebounded in January, reflecting that the outbreak appears to have peaked quickly and lockdowns have been averted,” the economist said. NAB chief Alan Oster.

“Conditions have remained in positive territory and are nowhere near as bad as we saw during the imposed shutdowns in 2020 and 2021.”

Inflation remained an issue as purchasing costs rose at a record quarterly rate of 3.4% amid high commodity prices and supply bottlenecks. Labor costs held steady at 1.9%, although retail price growth slowed slightly to 1.3%.

“The economy faces a period of high inflation as supply chain issues remain unresolved,” Oster added.

A separate ANZ consumer survey released on Tuesday showed a 1.9% drop last week as media speculation about the risk of future rate hikes apparently impacted heavily indebted households.

The Reserve Bank of Australia (RBA) conceded last week that there are scenarios where interest rates could rise later this year if the economy continues to surprise with strength.

The ABC’s latest measure of household spending intentions was also released on Tuesday, which showed a sharp 10% decline in January as a rise in coronavirus cases kept people at home.

Spending on bank cards, however, has stabilized over the past two weeks as cases decline and the overall economy appears to have weathered the outbreak well.

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Reporting by Wayne Cole; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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