Australian Macro Weekly: 'soft landing' on track – ANZ

Consumer and business surveys over the past week suggest the soft landing remains on track. Business conditions are still well above long run average levels, despite a decline of three points in September, while forward orders rose two points to be close to long-run averages.

 Labour cost growth decelerated to 2.0% q/q in September, its lowest rate since November 2021. Purchase cost growth fell to 1.8% q/q in September, while final product prices decelerated to 1.0% q/q. In both cases these are the weakest results since July 2021. Retail prices growth increased slightly from 1.78% q/q to 1.84% q/q, but this is still one of the weakest six monthly readings since the end of 2021.

On the household side, the ANZ‑Roy Morgan Australian Consumer Confidence survey was at its highest level since February.

The data and events flow picks up over the coming week with the September labour force survey and the minutes of the RBA’s October board meeting... we’ll be looking to see if the minutes convey increased concern about inflation given the uptick in the monthly Consumer Price Index. In the Q&A following a speech, RBA Assistant Governor Chris Kent was reported as saying that quantitative tightening (QT) was “under review”, adding that the RBA did not “have any current plans to sell bonds to pursue what’s called active QT at the moment”.