Australia Business Sentiment Turns Negative

Australia’s NAB Business Confidence Index rose to -24 in April 2026 from -29 in the previous month, which had marked the second-largest monthly drop on record. The survey flagged mounting strain from surging energy costs tied to the Middle East conflict, squeezing margins and curbing investment. Meanwhile, business conditions slid to 3 from 6, the second-lowest since 2020 and the fourth straight decline. NAB economist Michael Hayes warned rising costs were eroding activity, with forward orders, capex, cash flow, and employment all well below norms. Capital expenditure plunged 8 points, its sharpest drop since the post-pandemic rebound. Cost pressures intensified: purchase costs rose 4.5% qoq, far outpacing selling price growth of 1.8%, while retail prices jumped to 3.2% from 0.6%. The weak survey comes as the central bank lifted rates for a third consecutive meeting to 4.35%, amid concern firms may pass higher energy costs to consumers, stoking inflation expectations.

Australia’s NAB Business Confidence Index plunged to -29 in March 2026 from an upwardly revised zero in the prior month, marking the second-largest monthly drop on record and the weakest reading since April 2020. The sharp deterioration reflected fallout from the Iran war, which triggered a global oil shock and weighed heavily on sentiment. Despite collapsing confidence, business conditions held steady at 6. Sales edged lower (11 vs 12), while profitability weakened (1 vs 4), highlighting margin pressures as input costs surged 3% q/q. Firms appear unable to fully pass on higher costs, with retail price growth easing to 0.5% from 0.9%, signaling softer pricing power. The Reserve Bank raised its policy rate for a second time in March to 4.1%, partially reversing last year’s easing. With fuel costs surging amid Middle East tensions, the central bank warned headline inflation could climb to around 5% in Q2, underscoring the already challenging outlook for businesses.

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.