Business conditions slide, confidence remains weak amid trade uncertainty: NAB
Make us a preferred source
Make us a preferred source on Google
The news: Business conditions eased in April as profitability weakened, while confidence improved but still remains in negative territory, according to NAB's monthly business survey.
The numbers: Business conditions fell by 2 points to +2 index points, largely due to a 4 point fall in profitability, with the transport and utilities sectors and mining falling significantly.
All sectors faced a decline except for construction, which saw business conditions rise, and recreation and personal services, which was stable.
Purchase cost growth increased by 1.4% in quarterly equivalent terms while product price growth increased by 0.2% and retail price growth increased by 1.4%. However, labour cost growth remained at 1.6%
Capacity utilisation fell to 81.4% in April, from 82.8 in March, returning to the long-run average for the first time since mid-2021. Forward orders fell by 1 point to -3 index points in April while capex fell by 6 points to +1 index point.
Business confidence rose 1 point to -1 and is still below the long-run average. Confidence by industry was mixed, with a large decline in mining, although it remains positive, and a swing from negative to positive in manufacturing. In trend terms however, confidence is weakest in retail and wholesale.
The context: The survey was undertaken three weeks after US President Donald Trump’s ‘Liberation Day’ tariffs announcement, which accounts for some of the movement in business conditions and confidence, according to NAB.
State by state business conditions were mixed, with a lift in Tasmania and Queensland and a decline in South Australia, Victoria and New South Wales. In trend terms, conditions were weakest in Victoria and South Australia. Confidence improved in all states except Queensland and Western Australia.
What they said: “Overall, both business conditions and confidence remain weak relative to average levels, highlighting the risk that the economy is struggling to maintain the pick up in momentum we saw in the last quarter of 2024,” said NAB’s chief economist Sally Auld.
“We will continue to monitor how business sentiment develops in coming months in light of heightened global uncertainty and domestic developments.”
The source: NAB Monthly Business Survey
