According to a survey by National Australia Bank Ltd, business conditions in Australia have eased significantly in May due to reduced gains in employment and sales. The drop can be attributed to moderating demand growth, a trend possibly influenced by the Reserve Bank of Australia’s substantially aggressive tightening campaign. Although business conditions remain marginally above average, the confidence measure dropped 4 points and a negative outlook outweighed an optimistic one. Also, forward orders, which are a typical leading indicator of demand, fell to -5 in May. NAB Chief Economist Alan Oster warned that “with the easing in business conditions accelerating and forward orders falling sharply, there is a growing risk that the RBA’s attempts to maintain an even keel ‘run aground’.” Although persisting price pressures were a worry, the employment index fell 7 points to +4, and the survey’s measure of sales declined 8 points to +14 in May. The article notes that the Reserve Bank of Australia raised cash rate last week, and with markets pricing in the risk of two more hikes to 4.6 per cent, the odds of more interest rate hikes continues to rise.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.