(RTTNews) - Australia's business confidence strengthened notably in October on improvements across all industries except construction and retail, survey data from NAB showed on Tuesday.

The business confidence index rose to +5 from -2 in September. At the same time, the business conditions index was unchanged at 7 in October.

Trading conditions edged up one point to +13, while profitability was flat at 5 points. Meanwhile, the employment index slid to +3 points.

"Conditions continue to track at around average", NAB Head of Australian Economics Gareth Spence said.

"... while we know growth has slowed to its slowest rate in around 30 years over the year to June, excluding COVID lockdown periods, the business survey continues to tell us that activity has held up," said Spence.

Driven by an improvement in the retail sector, forward orders improved slightly in October. Capacity utilization dropped 0.7 percentage points to 82.5 percent.

"Capacity utilisation will continue to be an important dynamic for the RBA and the rate outlook as the economy continues to come into better balance," Spence said.

Regarding prices, the survey showed that labour cost growth weakened to 1.4 percent in quarterly equivalent terms from 1.9 percent in September, while purchase cost growth slowed to 0.9 percent.

Output price growth edged down to 0.5 percent from 0.6 percent. On the other hand, retail price inflation rebounded to 1.1 percent from 0.6 percent.

"The survey, like other price indicators, continues to suggest an ongoing gradual easing in inflation pressure, but also that there is still some way to go in the inflation moderation when we look at the consumer facing components," Spence added.