Australian business confidence in August rises to 10 from 7 previously


“The recent strength in trading conditions continued into August,” said Alan Oster, chief economist at NAB Group. “Official retail sales data for July confirmed that spending remained robust, as suggested by the previous survey, and today’s release shows few signs that August was much different. Conditions are good in most sectors other than construction, where profitability remains a challenge.

“Confidence rose again in August, as did other forward-looking indicators in the survey,” Oster said. “Confidence took a hit around June when interest rates started to rise, but it appears that initial corporate concerns about the impact have subsided and a more positive outlook prevails, at least for now.”

“Capacity utilization remains at near record highs in survey history, showing that businesses continue to operate near their limits,” Oster said.

“Cost growth moderated somewhat in August, likely reflecting a range of factors, including some easing in commodity prices and, perhaps, the fading of the one-time effects of the July minimum wage change.” , Mr. Oster said. “Yet the growth in purchasing costs and labor costs remains very strong.”

“In terms of prices, there was little change, with retail prices rising at a very rapid rate of 3.3% in quarterly terms,” ​​Oster said. “Price growth for leisure and personal services was also flat at a very strong 2%. This suggests that businesses are continuing to pass on price increases to consumers, creating another strong inflation

Inflation

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of evaluating strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates pressure from demand on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general price level where a given currency is effectively buying less than it has in previous periods. In terms of valuation of strength or currencies, and by extension foreign currencies, inflation or its measures are extremely influential. Inflation stems from the global creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured with GDP). This thus generates demand pressure on a supply that is not increasing at the same rate. The consumer price index then increases, generating inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies on several levels. This includes purchasing power parity, which attempts to compare the different purchasing power of each country based on the general level of prices. By doing so, it helps to determine the country with the most expensive cost of living. The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates in the forex market. Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on the exchange. Conversely, too low inflation (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the foreign exchange market.
Read this term result for Q3.”

“Overall, the survey indicates that demand remained strong through August,” Oster said. “We continue to expect inflation and rising interest rates to eventually weigh more heavily on household budgets, slowing the pace of consumption growth and helping to ease inflationary pressures. So far, however, it seems that this dynamic has not yet taken hold.


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