Australia Business Sentiment Inches Higher

Australia’s NAB Business Confidence Index inched up to 3 in January 2026 from a downwardly revised 2 in the prior month, marking the highest reading since October. However, business conditions weakened slightly (7 vs 9 in December), due to declines in both sales (10 vs 16) and profits (8 vs 11), while employment held steady for the third straight month (at 4). On the cost side, both labour and input cost pressures continued to ease, while quarterly growth in retail prices slowed further to 0.3% from 0.5% in December. According to NAB economist Michael Hayes, “Measures of cost and price growth in the survey fell to new post-pandemic lows.” He added that “overall, the January survey showed the economy has retained most of its momentum gained through the past year and the level of activity remains high,” even as capacity utilisation has eased somewhat in recent months. The survey was conducted before the RBA raised rates by 25bp to 3.85% last week, the first hike in two years.

Australia’s NAB Business Confidence Index edged up to 3 in December 2025 from an upwardly revised 2 in the previous month. Meanwhile, business conditions strengthened (9 vs 7 in November), driven by gains in both sales (16 vs 13) and profits (11 vs 4) while employment held steady (at 4). Price measures ticked higher in the three months to December, though capacity utilisation eased only slightly to a still elevated 83.2%. “The survey is consistent with the view that momentum improved in the Australian economy in the fourth quarter,” said NAB Chief Economist Sally Auld, noting that elevated utilisation was broad-based. Tuesday’s figure preceded December inflation data, after November eased to 3.4%, a three-month low but still above the central bank's 2–3% target. Meantime, the Reserve Bank is set to begin its first policy meeting of the year next week, having maintained the cash rate at 3.6% for the third month in a row in December.

Australia’s NAB Business Confidence Index slipped to 1 in November 2025 from 6 in the previous month, marking the weakest reading since April. At the same time, business conditions softened (7 vs 10 in October), retreating from their highest level since March 2024, as declines in sales (12 vs 18) and profitability (4 vs 9) offset relatively stable employment (4 vs 3). Despite softer sentiment, capacity utilisation edged higher to 83.6%, the strongest in 18 months, suggesting firms continue operating near full capacity. Price indicators also firmed, with growth in purchase costs rising at a quarterly pace of 1.3% and retail prices climbing 0.8%. “Overall, the survey continues to tell us that businesses are capacity constrained, and if economic growth accelerates further from the current starting point, we may quickly see additional pressure on prices,” said NAB Chief Economist Sally Auld.