Australia Business Sentiment Turns Negative

Australia’s NAB Business Confidence Index dropped sharply to -1 in February 2026 from 4 in the prior month, marking the first negative reading since last April as firms turned more cautious following the February rate hike. However, business conditions held steady, in line with the long-run average, as profits were unchanged (at 4) while sales edged higher (12 vs 11) but employment eased slightly (3 vs 4). Cost pressures picked up again during the month, with measures of labour and input costs both rebounding, while quarterly growth in retail prices rose to 1.0% from 0.3%, suggesting renewed price pressures. On a more positive note, investment plans climbed to their highest level in three years, while forward orders trebled to +6, pointing to stronger demand ahead. The survey was conducted from February 23 to March 2, meaning it only captured the early stage of the U.S.-Israeli attack on Iran and the subsequent jump in energy prices.

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.