News: NAB Australia business conditions falter in Oct-survey

SYDNEY, Nov 8 (Reuters) - Australian business conditions faltered in October as sales growth slowed while weakness in retail prices pointed to still-low inflation and the chance interest rates may yet have to be eased further.

National Australia Bank's (NAB) monthly survey of more than 500 firms showed its index of business conditions dipped 2 points to +6 in October, more than reversing September's one-point gain. The index remains above its long-run average, however.

The survey's measure of business confidence held also lost 2 points to stand at +4 in October. Sales and employment slipped in the month while profits held steady.

"The recent moderation in some survey indicators is a concerning trend that warrants close monitoring, but our assessment is that the deterioration to date is not yet enough to warrant a significant change in the outlook," said NAB chief economist Alan Oster.

Oster noted he was less confident about the economic outlook than the Reserve Bank of Australia (RBA) which had recently sounded upbeat on the prospects for sustained growth.

The central bank has been on hold since cutting rates in May and August and financial markets have priced out much chance of another easing for the next few months.

NAB's October survey also showed renewed price weakness that could be of concern to the RBA given it was surprisingly low inflation that directly led to this year's cuts.

Final product prices grew at just a 0.1 percent quarterly pace having fallen 0.3 percent from the September survey, while wage costs and input prices remained very subdued.

Fierce competition in the retail sector saw prices there fall 0.3 percent at a quarterly rate.

Official measures show underlying inflation was already at a record low of 1.5 percent in the third quarter and any further slippage could reignite pressure for a rate cut.

NAB has, for a while, predicted that further easing would come next year as building and resource exports cooled.