Australia Business Sentiment Tumbles to Lowest Since 2020

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.

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.