Australia’s Business Conditions Strengthen in August as Cost Pressures Recede

Economic

Summary:

Australian business conditions improved in August, with stronger profits, sales, and hiring, while input costs grew at their slowest pace since 2021 offering relief for margins and inflation....

Business Conditions Rebound to Long-Run Average

The National Australia Bank (NAB) survey showed the business conditions index rose two points to +7 in August, returning to its long-term average. This reflects firmer momentum in sales and profitability, with the sales sub-index holding steady at +12 and profitability climbing two points to +4. Business confidence, though down four points to +4, remains aligned with long-run trends, suggesting sentiment is stable despite external uncertainties.

The improvement points to a cause-and-effect chain between macroeconomic policy easing and business performance. Lower borrowing costs and a slowdown in inflation seen earlier in official June quarter GDP data have clearly supported consumption, which in turn has lifted corporate revenues.

Sectoral Strength in Manufacturing and Retail

Cyclically sensitive sectors such as manufacturing and retail saw notable gains in both confidence and conditions. This aligns with the broader pattern of improved domestic demand: households, having faced headwinds in recent years, are beginning to re-engage in spending as inflationary pressures cool.

The correlation between stronger household demand and sectoral improvement suggests that stimulus from consumer recovery is filtering through more broadly, rather than being confined to isolated industries.

Labour Market Indicators Point to Stability

Employment conditions rebounded three points to +6 in August, offsetting the dip recorded in July. Forward orders also edged up one point to +1, the first time they have entered positive territory in two years, signaling potential stability in hiring and production plans.

This rebound suggests a causal relationship between stronger domestic demand and firms’ willingness to expand their workforce. As profitability improves and cost pressures ease, businesses appear more confident in maintaining or increasing headcount.

Cost Pressures Ease to Multi-Year Lows

A critical highlight from the survey is the sharp slowdown in input costs. Purchase costs grew at a quarterly rate of just 1.1%, the lowest since 2021. Retail price growth halved to 0.5%, while labour cost growth moderated to 1.5% from 1.9%.

These trends represent a causal link to inflation relief: lower cost growth directly reduces pricing pressures across the economy, offering both businesses and households more breathing room. It also creates conditions for sustained profitability, as margin compression eases.

Positive Trajectory Into Second Half of 2025

Australia’s August business survey reinforces signs of a durable economic rebound. Firms are benefiting from improved demand, profitability, and hiring, while easing cost pressures support both margins and inflation control. The combination of stronger domestic momentum and subdued input growth suggests the economy is entering the second half of 2025 with healthier underpinnings.

For policymakers, the data provides reassurance that rate cuts are transmitting effectively, bolstering activity without reigniting inflation. For businesses, the challenge ahead lies in sustaining confidence and investment as external risks such as global trade uncertainty continue to loom.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Forex

Dollar Under Pressure from Jobs Concerns

In Asian trading Tuesday, the dollar index fell to 97.344, its weakest level since July 24. The drop came ahead of preliminary revisions to U.S. employment data for April 2024 through March 2025. Economists anticipate a downward adjustment of as many as 800,000 jobs, a figure that would highlight a much weaker labor market than previously reported.

The causal relationship is direct: weaker labor data strengthens expectations for Fed easing, which reduces dollar yields and undermines the currency’s attractiveness. As Alex Hill of Electus Financial put it, “The employment numbers are getting worse and worse at a heavy rate,” adding that the decline in the dollar could accelerate further.

Political Friction and Investor Anxiety

The Trump administration’s intervention in labor data has further unsettled investors. Reports suggest advisors are preparing a paper criticizing the Bureau of Labor Statistics, shortly after President Trump fired its commissioner, accusing her of manipulating data. This political intrusion raises correlation-based risks: while not directly changing the jobs numbers, the perception of compromised data integrity undermines market trust and amplifies concerns over central bank independence.

Bond investors have warned that long-term fiscal risks and political pressure on the Fed are being underpriced, suggesting greater volatility ahead.

Market Expectations for Fed Action

Traders now assign an 89.4% probability to a 25 basis point rate cut at the September meeting, with a 10.6% chance of a larger 50bp reduction, according to CME’s FedWatch tool. The combination of weak jobs data and political pressure makes deeper easing a credible scenario.

The effect on safe-haven assets is clear: gold edged up 0.1% to $3,636.58 per ounce, close to record highs, reflecting investor demand for protection against currency and policy instability.

Global Currency Moves Reflect Shifting Sentiment

The euro rose 0.1% to $1.1774, near a six-week peak, though gains were capped by France’s deepening political crisis after parliament toppled the government over debt-control plans. The yen firmed 0.2% to 147.22 per dollar following Prime Minister Shigeru Ishiba’s resignation, reversing earlier weakness.

Other majors also gained modestly against the dollar: the Australian dollar traded at $0.6598 and the New Zealand dollar at $0.5943, both up 0.1%. Sterling rose 0.1% to $1.3556, while the offshore yuan held steady at 7.1212 per dollar. These moves underscore a correlation: broader dollar weakness is spilling into FX markets, though domestic political and economic factors are moderating gains in some regions.

The dollar’s retreat reflects mounting pressure from labor market weakness and political noise that amplify the case for aggressive Fed easing. While the ECB is expected to hold rates steady this week and political crises weigh on the euro zone, the overriding driver remains U.S. monetary policy. Unless jobs data surprises on the upside, the dollar is likely to remain under pressure as investors prepare for a deeper policy shift from the Fed.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Stocks

Historic Rally Driven by Trade Clarity

The Nikkei jumped 0.9% in early Tuesday trading to reach 44,018.78, a record high for the index, while the broader Topix rose 0.4%. The immediate catalyst was confirmation that U.S. tariffs on Japanese autos will be lowered by September 16, removing uncertainty surrounding a trade deal struck in July. For Japan’s auto-dependent economy, tariff relief has a direct cause-and-effect relationship with corporate profitability and investor sentiment, explaining the surge in equities.

Investor enthusiasm was also amplified by political developments. Prime Minister Shigeru Ishiba, known for his fiscal conservatism, announced his resignation. Sanae Takaichi, who advocates stronger government spending and monetary easing, is expected to run for leadership of the ruling Liberal Democratic Party. Markets responded by pricing in higher odds of pro-growth policies, correlating political change with expectations of renewed fiscal stimulus.

The dual drivers trade clarity and a potential shift toward expansionary policy together created a powerful rally environment.

Market Breadth and Sector Moves

Of the 225 stocks in the Nikkei, 144 advanced while 77 declined, showing broad-based strength. The top performer was Advantest, surging 6.7%, followed by Tokuyama, which gained 5%. On the downside, Citizen Watch fell 5.8% after confirmation it will be removed from the index in October, while Takeda Pharmaceutical dropped 2.4%.

This dispersion highlights both structural reshuffling within the index and investor rotation toward beneficiaries of global trade relief and domestic stimulus.

Milestone Signals Confidence but Risks Remain

Crossing the 44,000 threshold underscores investor confidence in Japan’s resilience amid global trade shifts and domestic political change. The rally rests on both tangible drivers tariff reductions that directly improve competitiveness and speculative expectations of policy easing.

Yet risks remain: global trade frictions, monetary policy uncertainty, and leadership transitions could all shift momentum quickly. For now, however, the Nikkei’s historic climb signals that investors are willing to look past political uncertainty and bet on growth-oriented outcomes.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Commodity

OPEC+ Surprises with Modest Output Hike

Brent crude climbed 0.33% to $66.24 per barrel, while U.S. West Texas Intermediate gained 0.39% to $62.50. The move followed OPEC+’s weekend decision to raise production by just 137,000 barrels per day (bpd) starting in October. This increment is far smaller than the 555,000 bpd hikes seen in August and September, and even below the 411,000 bpd pace in July and June.

The direct cause-and-effect here is clear: smaller-than-expected supply additions reduce the risk of oversupply, immediately lending support to prices. The decision also marks a shift from the bloc’s earlier plan to maintain cuts until 2026, reflecting caution about fragile demand trends.

Geopolitical Risks Add to Supply Concerns

Oil prices also drew support from geopolitical tensions. Russia’s latest large-scale airstrike on Ukraine escalated the risk of new sanctions. President Donald Trump indicated readiness for a “second phase” of restrictions, while EU sanctions officials met in Washington to discuss the first coordinated transatlantic measures since Trump’s return to office.

If enacted, sanctions would curb Russia’s ability to export crude, directly tightening global supply. The causal linkage between geopolitical escalation and supply risk has been consistent throughout the war, and markets are now repricing the likelihood of renewed disruptions.

Macro Factors and Fed Outlook

Beyond supply-side dynamics, macroeconomic expectations are also influencing oil. The CME FedWatch tool shows an 89.4% probability of a quarter-point rate cut at next week’s Federal Reserve meeting. Lower borrowing costs generally support consumption and industrial activity, which in turn boosts oil demand.

Here the relationship is partly correlational: while rate cuts do not directly lift oil demand immediately, they improve the economic outlook and investor sentiment, reinforcing bullish momentum in energy markets.

Prices Supported by Dual Forces

Oil’s modest gains reflect a convergence of supply-side restraint and geopolitical risk. The smaller OPEC+ production hike provides near-term support by tightening expected balances, while potential sanctions on Russia raise the specter of further disruptions. Combined with easing U.S. monetary policy, the current backdrop favors price stability above $60 per barrel.

Yet the durability of this rally depends on how sanctions evolve and whether OPEC+ maintains discipline in the face of uncertain global demand growth.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Equities Lifted by Fed Easing Expectations

Investor sentiment in Asia strengthened on Tuesday, with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.2% in early trade. The momentum followed Wall Street’s upbeat close, where the Nasdaq hit a record high. Futures extended the rally, with Nasdaq contracts up 0.06% and S&P 500 futures up 0.05%.

Driving this optimism are expectations that the Federal Reserve will cut rates at its upcoming meeting. A weak U.S. jobs report on Friday reinforced the case for monetary easing, with markets pricing in a 25-basis-point cut as highly probable. Speculation has also emerged around the possibility of a larger 50bp reduction, now given a 10% chance by the CME FedWatch tool compared to virtually none a week ago.

The causal mechanism is straightforward: weaker labor data increases pressure on the Fed to ease policy, and expectations of lower borrowing costs directly support equity valuations by improving liquidity conditions.

Political Uncertainty and Market Resilience

Despite political instability across several economies, equity markets have largely looked past these risks. In Japan, Prime Minister Shigeru Ishiba’s resignation pushed the Nikkei nearly 1% higher, buoyed by a weaker yen and relief that tariffs on Japanese cars and auto parts will fall by mid-September. Similarly, political upheavals in France, Argentina, and Indonesia rattled sentiment in bond and FX markets, but equity investors remained focused on Fed easing.

This reflects a correlation rather than a direct causal relationship: while political turmoil typically heightens risk aversion, the dominant force shaping market direction remains U.S. monetary policy.

Currency and Bond Market Reaction

In currency markets, the yen firmed 0.1% to 147.37 per dollar, recovering losses from the previous session, while the euro steadied at $1.1768. U.S. Treasury yields remained pinned near five-month lows, with the two-year yield at 3.4966% and the 10-year yield at 4.0494%. The subdued yield environment signals that bond investors remain fixated on Fed policy rather than political disruptions.

The relationship here is causal: expectations of a rate cut push yields down as investors anticipate lower future returns, reinforcing the equity rally. Political risks, though relevant, are being priced in more selectively.

Commodities Respond to Policy and Supply Signals

Oil prices rose modestly after OPEC+ announced production increases below market expectations, with Brent crude up 0.36% at $66.26 per barrel and U.S. crude climbing 0.37% to $62.49. Meanwhile, gold surged to a record high of $3,647.23 an ounce, supported by expectations of imminent Fed easing and a weaker dollar.

The dynamics illustrate dual causality: supply-side constraints lifted oil, while monetary easing expectations boosted gold as investors sought inflation hedges and safe-haven assets.

Fed Easing Trumps Political Noise

Markets entered the week navigating a complex backdrop of weak U.S. labor data, looming CPI and PPI releases, and political uncertainty across major economies. Yet, the overriding driver remains monetary policy expectations. For now, optimism that the Fed will deliver at least a 25bp cut possibly more has overshadowed political risks, allowing equities to rise and commodities like gold to thrive.

The near-term outlook depends on upcoming inflation figures and whether they strengthen the case for deeper rate cuts. Until then, markets appear willing to discount political turbulence in favor of the Fed’s easing trajectory.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Confidence Slips Despite Policy Easing

The Westpac-Melbourne Institute survey revealed that Australian consumer sentiment fell to 95.4 in September, down from 98.5 in August. The drop comes after a strong 5.7% surge last month that briefly lifted the index to its highest level since early 2022. While sentiment remains near recent peaks, a reading below 100 still indicates that pessimists outnumber optimists, underscoring fragile consumer confidence.

The decline highlights a cause-and-effect tension: while three consecutive interest rate cuts from the Reserve Bank of Australia and steadily cooling inflation have improved household financial conditions, concerns over the broader economy are suppressing overall confidence. In other words, monetary easing is providing relief, but structural uncertainties continue to dominate consumer perceptions.

Family Finances Improve, But Economic Outlook Weakens

One of the survey’s bright spots lies in household finances. Compared with a year earlier, the index of family finances rose 2.6%, extending August’s rebound. Looking ahead, expectations for family finances over the next 12 months also edged up 0.9%. These improvements signal that the cost-of-living crisis has largely abated, with policy easing feeding into household budgets.

However, optimism at the personal level has not translated into confidence at the macroeconomic level. The survey’s measure of economic outlook for the next 12 months dropped sharply by 8.9%, while the five-year outlook fell 5.9%. This divergence shows correlation rather than contradiction: households recognize their immediate finances are better but remain skeptical about the sustainability of broader growth.

Spending Intentions Show Renewed Strain

The index measuring whether it is a good time to buy major household items fell 3.4% to 98.2, slipping back below the neutral mark. This measure has historically tracked closely with purchasing power, which eroded significantly during 2022–2024. While the sub-index has rebounded 23% since June 2024, it remains far below its long-run average of 124, suggesting that consumers are still reluctant to commit to big-ticket spending.

The cause here is straightforward: despite stronger family balance sheets, households remain wary of committing to durable purchases amid uncertainty about the economic path, weakening retail demand in the process.

Resilience Meets Persistent Anxiety

Australia’s September sentiment data illustrates a dual-track narrative. Households are enjoying tangible improvements in their financial conditions, thanks to easing inflation and lower borrowing costs. Yet broader concerns ranging from economic growth sustainability to potential shocks in the global environment continue to weigh heavily.

For policymakers, this mixed signal implies limited space for complacency. While revived household spending supported growth in Q2, the latest survey suggests that without a stronger and more credible improvement in the economic outlook, consumer caution could resurface, tempering momentum in the months ahead.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

1. Milan is expected to catch the September FOMC meeting, with the Senate committee to vote on his Fed nomination on Wednesday.

2. Macron to appoint new prime minister in the coming days.

3. Japan's LDP to accelerate preparations for leadership election.

4. U.S. consumers show declining confidence in job prospects.

5. OPEC+ voluntary cutters must offset 4.8 million bpd of excess output by July next year.

6. French government collapse triggers debt crisis fears.

[News Details]

Milan is expected to catch the September FOMC meeting, with the Senate committee to vote on his Fed nomination on Wednesday

A U.S. Senate committee plans to vote Wednesday on the nomination of White House economic adviser Stephen Milan to serve on the Federal Reserve Board of Governors. This move is likely to allow him to be confirmed by the full Senate before the Fed's crucial interest-rate decision in September. The Federal Open Market Committee (FOMC) is scheduled to meet on September 16th and 17th. Given weakening job growth, the FOMC is expected to cut interest rates for the first time since December. The Senate Banking Committee has posted the timing for the vote on Milan's nomination on its website. If all goes smoothly, the committee will advance Milan's nomination to the full Senate. Senate Republican leaders will then need a few days to push for a vote, clear procedural hurdles, and finalize his confirmation.

Macron to appoint new prime minister in the coming days

On the evening of September 8th, local time (early morning of September 9th, Beijing time), the French government led by Prime Minister François Bayrou failed to pass a confidence vote in the National Assembly (the lower house of parliament). It is expected that Attal will tender his government's resignation to President Emmanuel Macron on September 9th local time. According to the Elysée Palace, Macron will appoint a new prime minister in the coming days. Bayrou is the second French prime minister to step down in just over nine months, and France is set to welcome its fifth prime minister in less than two years.

Japan's LDP to accelerate preparations for leadership election

Japanese Prime Minister and ruling Liberal Democratic Party (LDP) leader Shigeru Ishiba announced his resignation as LDP president on September 7th, saying he would not run in the next LDP leadership race. On September 8th, the LDP held a high-level meeting to formally discuss holding a party leadership election. Analysts expect candidates to include former Foreign Minister and ex-LDP Secretary-General Toshimitsu Motegi, current Chief Cabinet Secretary Yoshimasa Hayashi, former Minister of Economic Security Sanae Takaichi, and Koichi Hagiuda, as well as Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi. The LDP is expected to decide on the voting method as early as September 9th, with the vote-counting day likely to be scheduled for October.

U.S. consumers show declining confidence in job prospects

According to the New York Fed's Survey of Consumer Expectations, the share of respondents who believe they could find a job if they became unemployed dropped sharply by 5.8 percentage points to 44.9%, the lowest level since the survey began in June 2013. Compared to a year ago, consumers' perceptions of their current household financial situations have worsened, with more households reporting deteriorating finances and fewer saying their finances have improved. Looking ahead one year, consumers expect gasoline prices to rise by 3.92%, food prices by 5.53%, medical costs by 8.81%, college tuition by 7.81%, and housing rents by 5.99%. The proportion of consumers who expect not to be able to make minimum debt payments over the next three months rose to 13.1%, up from the previous 12.3%.

OPEC+ voluntary cutters must offset 4.8 million bpd of excess output by July next year

In a statement, OPEC said that OPEC+ countries that had announced voluntary cuts but exceeded agreed quotas will have to compensate for excess oil production in the amount of 4.779 million bpd from August 2025 to and including June 2026. The volume of the compensation plan for Kazakhstan from August to June 2026 totals 2.63 million bpd, which is the largest volume of compensation among OPEC+ "volunteers." Iraq has the second-largest compensation obligation, aiming to reduce its oil output by 1.4 million bpd by the end of June 2026. Russia is to compensate for the excess production of 311,000 bpd.

French government collapse triggers debt crisis fears

The French government of Prime Minister François Bayrou was ousted in a no-confidence vote on Monday, leading to the collapse of its proposed €44 billion budget austerity plan. The move has plunged the eurozone's second-largest economy into a dual political and fiscal crisis, with markets worried that France may struggle to rein in its position as having the bloc's largest budget deficit.

François Bayrou's €44 billion austerity package was jointly rejected by both left- and right-wing lawmakers. Regardless of whether the next government comes from the Socialist Party or another camp, its fiscal plans are bound to be scaled back. Finance Minister Bruno Le Maire acknowledged that the new cabinet's austerity measures will be less severe than those of Bayrou's government. The Socialist Party has advocated for a €15 billion tax on the super-rich, but markets fear that such tax hikes could further dampen an already weak economic growth.

France’s debt stands at €3.3 trillion, equivalent to 114% of GDP — the third highest in the EU. Unlike countries such as Italy and Greece, France lacks a primary budget surplus. The country's audit office has warned that if growth slows or fiscal consolidation efforts falter, debt servicing costs could surge from €59 billion in 2029 to €100 billion, becoming the single largest item in the national budget.

[Today's Focus]

UTC+8 19:30 Speech by European Central Bank Governing Council member Joachim Nagel

UTC+8 19:50 Speech by Swiss National Bank President Martin Schlegel

UTC+8 22:00 U.S. Bureau of Labor Statistics releases annual benchmark revisions to nonfarm payroll data

UTC+8 23:15 Speech by European Central Bank Governing Council member François Villeroy de Galhau

UTC+8 00:00 EIA releases Monthly Short-Term Energy Outlook report

Risk Warnings and Disclaimers

Add to Favorites

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

Australia’s Business Conditions Strengthen in August as Cost Pressures Recede

Business Conditions Rebound to Long-Run Average

Sectoral Strength in Manufacturing and Retail

Labour Market Indicators Point to Stability

Cost Pressures Ease to Multi-Year Lows

Positive Trajectory Into Second Half of 2025

Source: Reuters

Dollar Hits Seven-Week Low as Weak Jobs Outlook Boosts Fed Cut Bets

Dollar Under Pressure from Jobs Concerns

Political Friction and Investor Anxiety

Market Expectations for Fed Action

Global Currency Moves Reflect Shifting Sentiment

Source: Reuters

Nikkei Surges Beyond 44,000 for First Time on Trade Relief and Stimulus Hopes

Historic Rally Driven by Trade Clarity

Milestone Signals Confidence but Risks Remain

Source: Reuters

Oil Prices Edge Higher on Smaller OPEC+ Output Hike and Russia Sanction Risks

OPEC+ Surprises with Modest Output Hike

Geopolitical Risks Add to Supply Concerns

Macro Factors and Fed Outlook

Prices Supported by Dual Forces

Source: Reuters

Markets Rally on Fed Cut Hopes Despite Political Turmoil

Equities Lifted by Fed Easing Expectations

Political Uncertainty and Market Resilience

Currency and Bond Market Reaction

Fed Easing Trumps Political Noise

Source: Reuters

Australian Consumer Confidence Retreats in September as Economic Fears Deepen

Confidence Slips Despite Policy Easing

Family Finances Improve, But Economic Outlook Weakens

Spending Intentions Show Renewed Strain

Resilience Meets Persistent Anxiety

Source: Reuters

French Government Collapse Roils Debt Markets; Japan's LDP Moves Up Leadership Election

[Quick Facts]

[News Details]

[Today's Focus]

Risk Disclosure