(Bloomberg) -- Australian business conditions showed ongoing resilience to higher interest rates and elevated price pressures, while consumer confidence fell further into “deeply pessimistic” territory, highlighting the divergent responses of the corporate and household sectors to tighter policy.

Business conditions, which measure sales, employment and profitability, rose 2 points to 13 in August and held above the average level since the start of the year, a National Australia Bank Ltd. survey showed Tuesday. Confidence was steady at 2 points, implying optimists outnumber pessimists.

“Businesses continue to report very high levels of capacity utilization suggesting that, even with growth slowing, the balance of supply and demand in the economy remains very tight overall,” said Alan Oster, chief economist at NAB. “Price growth also remains elevated which reflects the considerable cost pressures businesses are facing, as well as the ongoing resilience of demand.”

A separate household survey from Westpac Banking Corp. released an hour earlier showed consumer sentiment slipped 1.5% to 79.7 points in September as pessimists heavily outnumber optimists, with 100 the dividing line. The index has held in a range of 78-86 over the past year.

The surveys underscore the persistent difference between Australia’s heavily-indebted households and its corporate sector that suggests businesses are better able to cope with higher borrowing costs. 

NAB’s survey showed leading indicators strengthened, in a positive sign for the economy, with forward orders up 1 point and capacity utilization hitting 85.1%. At the same time, labor costs eased to 3.2% in quarterly equivalent terms, from 3.7% in the three months through June. Final price growth, which includes purchase costs, edged down to 1.7% from 1.9% in the second quarter. 

The Reserve Bank is currently in watch-and-wait mode after 12 rate hikes since May last year to take the cash rate to an 11-year high of 4.1% as it tries to gain control over inflation. While consumer prices have begun to recede, a robust labor market and strengthening wage growth have policymakers ready to tighten further if needed.

Westpac’s poll was conducted Sept. 4-8, spanning the RBA’s Sept. 5 meeting when it left the cash rate unchanged for a third straight month, suggesting the pause is failing to lift the mood of Australian consumers.

“Since the survey began in 1974, the only comparable period of such sustained weakness was during the recession of the early 1990s,” said Bill Evans, chief economist at Westpac. “Persistent pessimism has continued despite easing fears of further interest rate rises.”

A gauge of the outlook for household spending, “the time to buy a major household item” sub-index fell 3% to 76.6. 

“This component is particularly troubling because, unlike the overall index and the other components, it is tracking well below the levels seen in the recession of the early 1990s,” Evans said. The average during that period was a “much milder” 91, he added.

©2023 Bloomberg L.P.