Australian business confidence climbed to its highest level in three years in July, supported by robust activity in the services and construction sectors, according to a survey from National Australia Bank (NAB) released on Tuesday.
However, rising costs continued to fuel inflationary pressures, particularly in retail prices.
The latest National Australia Bank (NAB) business confidence survey rose to +7 in July from +5 in June, marking the strongest reading since August 2022.
Business conditions eased slightly to +5 from +7 the previous month but remained at solid levels.
"Overall, the survey points to an improvement in activity through Q2 and suggests that the worries globally have not materially influenced local hiring and investment decisions," said NAB chief economist Sally Auld.
"Generally, the services sectors, both consumer facing and for businesses, are stronger while retail and wholesale remain weaker."
Expectations of lower borrowing costs may have contributed to the upbeat mood, with the Reserve Bank of Australia widely anticipated to cut interest rates to a two-year low of 3.60% later on Tuesday.
In the details, NAB’s sales measure dipped three points to +11 in July, following a sharp nine-point rise in June. Profitability eased two points to +2, while the survey’s employment index slipped three points to +1 — a potential caution signal for the labour market.
The latest official data from June showed unemployment unexpectedly rising to 4.3%, the highest level since late 2021, fuelling concerns over a softening jobs outlook.
"The survey is consistent with improving economic growth, although still highlights the challenges around cost pressures faced by many businesses," Auld noted.
