Australia’s business sector showed signs of renewed momentum in June, with National Australia Bank’s Monthly Business Survey revealing strong gains in both business confidence and conditions.
Business confidence rose by 3 points to +5 index points, the third consecutive monthly rise, bringing the trend measure to its highest level in over a year.
In trend terms, confidence remained strongest in the construction sector, while retail and wholesale lagged behind.
The improvement in forward orders, which have been building since mid-2024, continued into June.
Forward orders rose 2 points to 0 index points, marking the best result since September 2023.
Capacity utilisation also increased for the second month in a row, reaching 83.3%, and is now back to levels last seen in January 2025 in trend terms.
Business conditions jumped 8 points to 9 index points in June, driven by significant improvements in trading conditions and profitability.
While NAB noted that monthly data can be volatile, historical patterns suggest such sharp monthly rises are often only partially reversed.
The strength in June was sufficient to lift the trend measure for the first time this year, though it remains below the long-run average.
By geography, Queensland and Tasmania led the improvement, showing large gains in business conditions. New South Wales and Victoria also posted increases, while conditions declined in South Australia and Western Australia.
In trend terms, Queensland and Tasmania continued to lead the pack, while South Australia, Victoria, and Western Australia recorded the weakest conditions and confidence.
On inflation indicators, there was little underlying change. Labour cost growth eased slightly to 1.5% in quarterly equivalent terms. Purchase cost growth rose to 1.5% from 1.2% but stayed within its recent range.
Product price growth ticked up to 0.6%, though retail price growth slowed to its lowest level since early 2023, also at 0.6%.
NAB Head of Australian Economics Gareth Spence said the results were encouraging after a turbulent start to the year:
“After a volatile but soft year for business confidence, we have seen a trend improvement over the past three months,” said Spence. “It is now around its long-run average of 5 index points.”
“Overall, the survey is encouraging that sluggish momentum in early 2025 will improve into the second half, with a notable increase in conditions in the month. An improvement in confidence is also welcome given the raft of negative headlines globally over recent months.
"While there were large moves in the month, and we know that the monthly survey can be volatile, the hope is at least some of these trends will be sustained over coming months.”
