Australian businesses’ cashflow is slowly improving, according to Westpac’s Business Snapshot report.
Businesses’ ratio of income to expenses, known as the Westpac Business Cashflow Gauge, rose by 0.4% last quarter. This was partly due to the Reserve Bank of Australia’s February rate cut, which lowered debt servicing costs by 1.3%, the report said.
“We’re seeing a continuing trend where businesses in the middle market are performing strongly. They’re focusing on capacity expansion and long-term growth and it’s encouraging to see them investing for the future,” said Westpac’s commercial banking general manager Shane Howell.
“We know there are businesses still doing it tough who aren’t out of the woods yet, particularly at the smaller end of the market and we want them to know we are here to help.”
Businesses with an aggregated turnover between A$5 million and $50 million have seen investment in equipment and financing rise by more than three times their working capital growth rate.
Companies across all sectors except Agriculture and Personal Services saw growth in their cashflow gauge last quarter. Recreation Services led by an almost 5% increase, followed by Accommodation, Cafes & Restaurants at nearly 4%.
Agriculture’s drop of just over 1% was affected by adverse weather events earlier in 2025, including Cyclone Alfred in Queensland and New South Wales, and droughts seen in several states.
Westpac revised its 2025 GDP growth projection to 1.9%, down from 2.2% in its February Business Snapshot, amid global economic pressures from the United States’ tariffs.
“Australian businesses are faring well despite the challenging global backdrop. Sentiment is strong with the benefits from moderate wage growth, easing inflation and further RBA rate cuts expected to support a gradual lift in private sector demand over the coming year,” said Howell.
