By James Glynn
SYDNEY--Australian firms are bracing for the worst as costs rise sharply due to the war in the Middle East, and the Reserve Bank of Australia signals that more interest rate increases are likely.
Business confidence fell 29 points to -29 index points in March, the second largest monthly fall in the history of the National Australia Bank's survey.
The decline in conditions was broad-based across industries and was largest in transport and utilities, construction and retail, where direct impacts on costs and consumer demand were most obvious.
Still, business conditions fell only 1 point to 6 index points in March, reflecting the fact that while the global news backdrop has hurt sentiment, it is still early in terms of the flow through to activity, NAB economist Michael Hayes said.
The economy had carried a healthy level of momentum heading into the unfolding shock, he added.
Indeed, capacity utilization rose 0.2 percentage points, unwinding some recent easing and remained elevated with seven of eight industries sitting about their long-run average in trend terms, the data showed.
But pain is growing for firms as purchase cost growth in quarterly terms more than doubled to 3.0% in March and product price growth rose to 1.1%, according to the NAB survey.
-- Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
04-13-26 2223ET
