Australia Business Mood Remains Deeply Negative

Australia’s NAB Business Confidence Index rose to -14 in May from -24 in the prior month, marking its highest print since February and signaling modest improvement from very weak levels. Confidence, however, remained firmly negative, underscoring concerns over the economic outlook. Business conditions held at 3, halting a four-month slide as activity stabilized despite softer demand. Profitability stayed the weakest component relative to long-run norms, reflecting margin strain from elevated costs. Cost growth eased but remained historically high, while capacity utilisation slipped below 82% for the first time since early 2025, pointing to softer momentum. NAB economist Michael Hayes noted sentiment was negative across industries amid global uncertainty, a weakening domestic backdrop, and persistent cost pressures. Firms also face high borrowing costs after the central bank lifted rates to 4.35% to curb sticky inflation and prevent rising energy costs from feeding into consumer prices.

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.