NAB monthly business survey shows uptick in confidence, conditions for September

Australian business confidence remains sluggish, one of Australia’s biggest banks has warned, even as conditions and confidence levels lifted last month.

NAB’s business survey index revealed a three-point uptick in confidence and conditions over September, pushing the country’s business conditions back to its long-run average.

Business confidence improved from negative five to negative two in the index, while conditions lifted from four to seven points.

The closely watched economic indicator surveys businesses on a range of metrics from profitability and capital expenditure to forward orders, labour and energy costs to present a month-by-month picture of Australian business activity.

Trading conditions lifted from eight points to 12, while profitability rose from two to five and employment lifted from one point to five.

The rise in conditions was broadbased across the states, the report reveals, led by Queensland with a seven point rise and Victoria, lifting six points.

Only South Australia fell across September, down six points.

NAB head of Australian economics Gareth Spence said the country could be passing through its “weakest point in economic growth for this cycle”.

“Some of last month’s fall in confidence was reversed in September but confidence remains well below average” he said.

“Confidence remains weakest in the goods distribution industries, retail and wholesale, though we did see an improvement in retail alongside recreation and personal services in the month.

“The rebound in conditions in the month was driven by manufacturing, recreation and personal services, retail and wholesale.

“Interestingly, as we think we are passing through the weakest point in economic growth for this cycle, business conditions have broadly tracked around average through mid-2024.”

But subdued forward orders, recorded at negative five in the index, could point to pressure in short-term activity, the report states.

Input costs are also easing, with labour cost growth slipping from 1.8 per cent in equivalent quarterly terms in August to 1.7 per cent in September and purchase cost growth easing from 1.6 per cent to 1.2 per cent.

“Input cost growth remains elevated, with both labour and purchase costs growth still high but both continue to trend lower,” Mr Spence said.

“This is consistent with what we are seeing in the labour market, with wage growth looking to have past its peak and the moderation in import price growth.

“Overall, the business survey points to some encouraging signs as the RBA attempts to come in for a soft landing.

“While we would like to see the easing in price growth maintained over coming months and for conditions to hold up even if just at around average levels, for now the trends remain encouraging”.