Australia Business Sentiment Slips to 3-Month Low

Australia’s NAB Business Confidence Index fell to -8 in August 2026 from -6 in the previous month, marking the lowest reading since May. Meanwhile, business conditions slid to a six-year low, dropping below the long-run average since mid-2025, amid declines in sales, profitability, and employment. The deterioration pointed to a broad-based weakening in business activity, with firms becoming more cautious about demand and operating conditions. The survey also suggested that cost pressures remained elevated, while forward orders softened, highlighting growing headwinds to business investment and hiring. The subdued confidence and weakening conditions may reinforce expectations that the Reserve Bank of Australia will remain cautious on further policy easing, particularly as inflationary pressures remain sticky.

Australia’s NAB Business Confidence Index held at -6 in July 2026, unchanged from a revised reading in the previous month and remaining well below the level recorded in February before the U.S.-Israeli war on Iran began. Meanwhile, business conditions edged up (4 vs 3 in June), but stayed below the long-run average of 7. Employment and profitability improved, while sales were unchanged. Capacity utilisation rose sharply to 83.0%, led by the finance, business and property, and wholesale industries. NAB said that despite improved outcomes from the peak impact of the Middle East crisis, “elevated uncertainty has continued to weigh on business confidence.” It also noted that cost pressures alongside a softer outlook for forward demand were likely to keep margins under pressure. Final prices and purchase costs increased, driven largely by swings in fuel prices, with transport and utilities among the key contributors.

Australia’s NAB Business Confidence Index jumped to -5 in June 2026 from -14 in May, marking its strongest reading since February as sentiment improved following the easing of geopolitical tensions. Meanwhile, business conditions held steady at 3 for a third consecutive month after the U.S. and Iran reached an agreement to end their multi-month conflict in the Middle East. Price pressures also moderated, with product price growth slowing to its weakest pace since February and retail prices falling for the first time in seven years, according to the survey. Despite the improvement in confidence, the results continued to point to subdued business activity through the first half of 2026. NAB noted that while the Middle East conflict had raised concerns over growth and inflation, its impact on business activity and pricing proved less severe than initially feared, helping support a more resilient business environment.