Home topics news Credit: Tara Clark News News Consumer spending slump hits businesses, Q2 outlook weakens Yajush Gupta June 13, 2024 The Australian economy shows signs of continued sluggishness. The National Australia Bank’s (NAB) latest business survey reveals a slight decline in overall business conditions, suggesting the subdued economic activity seen in Q1 data persists into Q2. This softness is particularly evident in consumer-facing sectors like retail, while a positive employment outlook remains a bright spot. Business confidence fell back into negative territory in May as conditions continued to gradually soften, suggesting the subdued economic activity seen in the Q1 GDP data has continued into Q2. Business conditions slipped just below average with trading conditions and profitability easing – though the employment sub-component improved somewhat to be back above average. There were falls in conditions across most consumer-facing sectors including retail and recreation & personal services, while forward orders remained negative overall with deep negatives in retail, wholesale and construction. Nonetheless, capacity utilisation remains above average and cost and price growth measures rose in the month – including retail price growth, which rebounded back up to 1.6% in quarterly terms. This suggests that, while growth has slowed, the process of bringing supply and demand back into balance remains incomplete, reinforcing our expectation that inflation will continue to moderate only gradually from here. NAB Chief Economist Alan Oster said that business conditions fell 1pt to +6 index points overall, just below the long-run average. Employment rose 3pts to +5 index points,