STOCKS | Australia Business Conditions Fall to Six-Year Low as Profits Weaken

Australia's business conditions fell to a six-year low in August, with profit and sales conditions weakening sharply. According to Sina Finance, National Australia Bank's September 8 survey showed the business conditions index dropped 5 points to minus 1, the lowest level since August 2020. The profit index fell 10 points to minus 9 and the sales conditions index declined 5 points to plus 3, both at their lowest levels since the pandemic. Among the eight industries surveyed, conditions worsened in six, with construction, mining, and manufacturing posting the biggest declines. The employment index slipped 1 point to plus 3, remaining relatively stable. National Australia Bank said the divergence between profit and employment indicators is unlikely to last, and that employment may weaken later if profits stay low. On a quarterly growth basis, purchase costs rose 2.3% while final product prices increased 0.8%. Costs rose faster than prices, squeezing profit margins. Capacity utilization fell 0.6 percentage point to 82.5%, though it remained above the long-term average. The forward orders index rebounded 3 points to zero, but remained weak. The survey showed slower business activity and persistent cost pressure, and National Australia Bank said insufficient pass-through of input costs may begin to affect hiring and capital spending decisions.