Australia business confidence shaken as costs climb, survey shows

SYDNEY, May 12 (Reuters) - Australian ‌business confidence ​remained ​mired in gloom in April, a survey showed on Tuesday, as spiking energy costs from the Middle ‌East war squeezed profit margins and pressured investment ⁠plans.

The survey from National Australia Bank showed its index of business confidence ‌improved only marginally to -24 in ‌April, having dived 29 points to -29 in March, the second-largest monthly fall in history.

Its measure of business conditions fell ​3 points to +3, the second-lowest reading since 2020 and the fourth straight month of decline.

"The survey suggests that ⁠rising prices and pressure on margins are beginning to affect activity and investment measures, ​as forward orders, capex, cash flow and employment have all fallen noticeably in recent months and are ​sitting well below their respective ‌long-run averages," said Michael Hayes, an economist at NAB.

Forward orders fell a further 4 points in ⁠April to be down 11 points since February and well below their long-run average. Capital expenditure slid 8 points in the largest ⁠such drop in the post-COVID period.

Measures of costs all rose sharply in ​the month, with purchase costs up 4.5% at a quarterly pace and well above selling prices at 1.8%. Retail price growth climbed to ‌3.2%, from 0.6%.

The Reserve Bank of Australia has raised interest rates three times in a row ‌to reach 4.35% as it battles to control stubborn inflation. ⁠Policy makers are concerned ‌businesses will pass on ​rising energy costs to consumers and stoke expectations of future inflation.

(Reporting by Wayne Cole; Editing by Edwina ‌Gibbs)

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