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NAB released its Quarterly Business Survey for Q4 2024. Here, a variety of challenges were highlighted, with labour shortages being a persistent one.
For the second consecutive quarter, labour constraints were a problem for 82 per cent of businesses.
CreditorWatch chief economist Ivan Colhoun believes that the upper hand jobseekers have in the current market could influence the Reserve Bank of Australia’s (RBA) 2025 cash rate decisions.
“The most interesting aspect of the NAB quarterly survey is the news that the number of firms reporting the availability of labour as a significant constraint remains a very high 34 per cent and this has not changed over 2024. This is good news for job seekers and suggests the RBA does not have to engage in either a rapid or large series of interest rate reductions,” said Colhoun.
“News on the inflation front was favourable with cost increases and expected retail price rises over the next three months back to levels broadly consistent with the RBA’s inflation target. That should allow the RBA to reduce interest rates by 25bps at its mid-February Board Meeting in just under two weeks’ time.”
With each passing day, it seems more and more economists are jumping on board with a February rate cut prediction. This will be the first cut since November 2020 and the first change since the 4.35 per cent holds began in November 2023.
NAB also detailed some of the other challenges affecting Aussie businesses. The top 10 were:
- Wage costs (61.9).
- Pressure of margins (47.8).
- Demand (47.5).
- Availability of labour (39.3).
- Federal government’s policies/regulations (34.4).
- Interest rates (33.1).
- State government’s policies/regulations (32.1).
- Outlook for business (27.6).
- Consumer confidence (25.4).
- Global outlook/geopolitics (20.7).
For some businesses, a rate cut could ease some pressure as consumer confidence sees an uplift. This was the topic of discussion in an upcoming episode of Broker Daily’s Finance Specialist.
Colhoun said: “Other news from the survey is broadly similar to that from the monthly survey: Queensland and NSW businesses report the strongest business conditions, with SA and Victorian firms reporting weaker, but not very weak business conditions.
“By industry, retail is weakest, while conditions in mining and manufacturing have been steadily deteriorating through 2024. Conditions are strongest in recreation and personal services, transport and banking, finance and business services.
“It’s likely far too soon for this survey to have reflected any expectations let alone impacts of recent US tariff news and moves. The first indication might be in the upcoming January monthly NAB survey, more likely in coming months.”
[Related: Many banks agree a February rate cut is incoming]
