(Bloomberg) — Australian consumers turned gloomy and business confidence sank in a combination that highlighted increasing concern about the job market as the economy labors under elevated interest rates.

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A National Australia Bank Ltd. survey showed Tuesday that business confidence fell 5 points to -4 in August while conditions, which measure jobs, sales and profitability, slid 3 points. The employment subcomponent was the main mover, falling 6 points.

“Conditions are now fairly clearly below average compared to the history of the survey which reflects the weakness seen in the private sector broadly as the economy has slowed,” said NAB Chief Economist Alan Oster. The drop in the employment gauge “suggests the period of very strong private sector labor demand seen throughout the post-Covid period may be coming to an end.”

Concern about the employment outlook was a major reason why a separate Westpac Banking Corp. survey on Tuesday showed consumer confidence slipped 0.5% in September to 84.6 points. The index has held below 100 — the dividing line between pessimists and optimists — since March 2022.

The data highlight that business and household sentiment are now converging after moving on different tracks for the past two years. It reflects the weight of high rates and sticky inflation that are clouding the economic outlook.

“The pessimism that has dominated for over two years now is still showing no real signs of lifting,” said Matthew Hassan, a senior economist at Westpac. “While cost-of-living pressures are becoming a little less intense and fears of further interest rate rises have eased, consumers are becoming more concerned about where the economy may be headed and what this could mean for jobs.”

Data last week showed Australia’s economic weakness persisted in the three months through June as consumers hunkered down. The Reserve Bank held rates last month at a 12-year high of 4.35% while retaining a hawkish bent given inflation remains strong.

The Australian labor market has been surprisingly resilient through the tightening cycle, with the jobless rate at a still-low 4.2%. Still, it has risen half a percentage point over the past five months and is at the highest level in 2-1/2 years.

The RBA next convenes on Sept. 23-24, with economists and financial markets predicting it will again leave rates on hold.

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“There’s certainly a degree of caution within Australian households and how they’re spending their money,” said Rob Scott, managing director and chief executive of Australian retail and mining conglomerate Wesfarmers Ltd.

The Perth-based company, which owns retail brands Bunnings, Kmart and Target, is trying to keep prices “really low” to help boost sales, Scott told Bloomberg Television. He added that businesses were facing significant pressures in the form of higher wages, energy prices, domestic transport and utilities and accommodation costs.

Other key data points:

• Trading conditions fell 2 points and profitability slid 1 point, NAB’s survey showed

• Forward orders were unchanged at -4 points

• Still, capacity utilization remains elevated and capex rose

• Westpac’s report showed the family finances vs a year ago sub-index rose a further 1.2% in September to be up 13.1% since July, though it remains in “deeply pessimistic territory”

• The time to buy a major household item sub-index, the component most impacted by the decline in purchasing power over the last two years, was unchanged at 82.6 in September, well below its long run average of 124.2

–With assistance from Haidi Lun and Shery Ahn.

(Adds NAB business confidence, Wesfarmers CEO comments to BTV)

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