MNI BRIEF: Aussie Business Confidence Wanes, Conditions Strong
The Reserve Bank of Australia will heed the slide in Australian business confidence amid rising rates, as markets slashed the odds of another rate rise amid the turmoil unleashed by the collapse of Silicon Valley Bank.
RBA Governor Philip Lowe said last week the business survey would be one of four indicators he would monitor ahead of the April 4 meeting. The other three indicators are jobs, retail sales and the monthly Consumer Price Index. Overnight indexed swaps have priced in 1-2bp of easing at the April 4 meeting, while a 25bp cut is now fully priced in for the December meeting. (See STIR : RBA-Dated OIS Strip Calls Time On RBA Hiking Cycle (For Now)
Business conditions fell 1 point to 17 index points in February, while business confidence fell 10 points to -4 index points. Forward orders fell 3 points to 3 index points, while capacity utilisation eased slightly. Price and cost growth remained high. Purchase cost growth remained at 3.1% and output price growth was steady at 1.6%.
Meanwhile, the Westpac- Melbourne Institute consumer sentiment index was unchanged at 78.5 in March. It was the second month below 80, the first time for consecutive weak readings since the recession in the early 1990s. The survey highlighted concerns with inflation and interest rates, while home buyer sentiment fell to its weakest level since 1989.