Australian December Business confidence 3 (prior 1) & Conditions 9 (prior 7)

Australian business conditions improved in December as sales and profits strengthened, while elevated capacity utilisation suggests limited spare capacity.Summary:NAB business conditions rose to +9 in DecemberBusiness confidence edged higher to +3Sales and profits strengthened, employment steadyCapacity utilisation remains elevated at 83.2%Data point to improved Q4 economic momentumAustralian business activity strengthened in December, with sales and profits improving and capacity utilisation remaining elevated, reinforcing signs that economic momentum picked up late in 2025, according to a survey from National Australia Bank.NAB’s business conditions index rose two points to +9 in December after a sharp fall the previous month. Business confidence edged up to +3 from +2, remaining positive but subdued by historical standards.Sales were a key driver of the improvement, jumping three points to a historically strong +16, adding to broader evidence of a recovery in consumer demand. Profitability also improved, with the profits index rising three points to +7, while employment held steady at +4.Price pressures firmed modestly over the three months to December, while capacity utilisation eased only slightly to 83.2%, a level NAB considers elevated and indicative of limited spare capacity across the economy.NAB chief economist Sally Auld said the survey aligns with the view that economic momentum improved in the fourth quarter, noting that high capacity utilisation remains broad-based rather than confined to a handful of sectors.Cyclically sensitive industries, including retail and manufacturing, recorded gains in both business conditions and employment. Trend activity was strongest in services, underscoring the sector’s continued role as the primary engine of domestic growth.Overall, the survey suggests the economy may be operating close to its effective speed limit, a signal likely to be watched closely by policymakers assessing inflation risks and the outlook for monetary policy. –The survey reinforces signs of improving late-2025 momentum and highlights persistent capacity constraints. For markets, the data supports the view that inflation risks remain asymmetric, even as growth stabilises.–Reserve Bank of Australia meeting next week:There are some analysts tipping a rate hike.
This article was written by Eamonn Sheridan at investinglive.com.

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