(RTTNews) - Australia business confidence turned negative in May underscoring that the economic activity continued to remain subdued into the second quarter, survey results from NAB showed on Tuesday.
The business confidence index dropped to -3 in May from +2 in April. At -6, the forward orders index remained deep in the negative zone. Capex dropped four points to +4, while capacity utilization rose slightly to 83.3 percent.
Capacity utilization remained above average indicating that the process of bringing supply and demand back into balance remains incomplete.
Cost and price growth measures re-accelerated in May. Labor cost growth advanced to 2.3 percent from 1.5 percent in April and purchase cost growth climbed to 1.9 percent from 1.3 percent.
Product prices, retail prices and recreation and personal services prices also increased at faster rates in May. The survey suggested that inflation will continue to moderate only gradually from here.
The business conditions index slipped slightly to 6 in May from 7 a month ago.
Employment rose by three points, while trading conditions and profitability dropped three points each in May.
NAB Chief Economist Alan Oster said "Overall, the message here is a mixed one for the RBA."
"There are warning signs on the outlook for growth but at the same time reasons to be very wary about the inflation outlook, and we expect the RBA to keep rates on hold for some time yet as they navigate through these contrasting risks," Oster added.
