Business sentiment across corporate Australia deteriorated further in April, with National Australia Bank’s latest Monthly Business Survey pointing to weaker conditions and a deeply pessimistic outlook. NAB said confidence remained firmly in negative territory, despite a small rebound from March.
Business conditions eased for the fourth consecutive month, slipping to +3 index points and dropping well below their long‑run average. The survey indicated that conditions fell a further three points in April, effectively reversing the improvement recorded through 2025.
“Conditions are at their second lowest level since 2020, signalling the prospect of slower economic activity in coming quarters,” the report’s authors Michael Hayes, Gareth Spence, and Sally Auld (pictured left to right) said.
Trading conditions and employment softened, profitability was flat, and capacity utilisation edged down to 82.5% – the lowest reading since mid‑2025, though still above its historical norm.
Forward orders fell further and are now sitting well below average levels, while capital expenditure logged its sharpest one‑month decline of the post‑COVID period, underscoring a more cautious stance on investment.
Despite the softer activity backdrop, businesses continue to face rapid increases in input costs. NAB reported that purchase costs surged to a quarterly‑equivalent pace of 4.5% in April, running well ahead of final product price growth at 1.8%. As Hayes, Spence and Auld noted, “Purchase cost growth (in quarterly terms) lifted sharply to 4.5% in April, outpacing final product price growth at 1.8%.”
The gap between input and output prices is evident across all major industries and is particularly acute in manufacturing and construction, where cost growth outstrips selling‑price growth by several percentage points.
The survey highlighted a broadening squeeze on margins as cost growth exceeds price growth across sectors, with the authors warning that “Pressure on margins is increasing as purchase cost growth is more than 1ppt higher than prices in all industries.”
Labour cost growth ticked up to 1.7% in quarterly‑equivalent terms, while final product prices rose 1.8%. Retail prices jumped 3.2%, described in the report as a multi‑year high, pointing to stronger pass‑through of cost pressures to consumers.
These domestic pressures are being reinforced by developments in global commodity and bond markets, with the ongoing US–Iran standoff, higher oil prices and firmer US inflation contributing to higher global yields and imported cost pressures for Australia.
Survey responses also indicate that financing conditions are becoming less supportive. NAB reports that access to credit has become more difficult for many firms, pointing to a tightening in financial conditions for business.
“The ease of accessing credit is deteriorating, suggesting some tightening of financial conditions for Australian business,” Hayes, Spence, and Auld wrote.
Taken together, weaker sentiment, falling orders, reduced capex and rising costs signal a likely moderation in business activity over coming quarters.
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