AUSTRALIAN business conditions softened in April as gains in sales and employment slowed in the face of decade-high interest rates, a survey showed on Monday, while price pressures showed further signs of abating.

The survey from the National Australia Bank (NAB) revealed its index of business conditions fell 2 points to +7, and are now around its long-run average. That was driven by a sharp decline in the employment index to just +2, from +7 before.

Its business confidence index was unchanged at +1.

“All three components of business conditions were back at their long-run averages in April,” said Alan Oster, NAB chief economist.

“In some ways this marks a bit of a milestone after a long period in which conditions have been gradually easing from the very high levels seen in 2022, reflecting slowing economic growth.”

The Reserve Bank of Australia (RBA) left interest rates unchanged at 4.35 per cent for a fourth straight meeting last week but has said that it is vigilant on any upside inflation risks after a surprisingly strong first-quarter inflation report.

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The NAB survey showed some welcome progress on price pressures.

Quarterly growth in retail prices eased to 0.9 per cent from 1.4 per cent before, while increases in purchasing costs and labour costs slowed to 1.2 per cent and 1.5 per cent, from 1.5 per cent and 1.7 per cent previously.

“That is an optimistic sign for the prospects of some easing in inflation in Q2, though we will have to wait see how this evolves over the coming months,” said Oster. REUTERS