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Business confidence fell to -4 index points, the lowest since December 2024
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Business conditions eased but remained positive at 7 index points
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Wage costs and labour shortages remain the biggest pressures on firms
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Conditions stayed positive across all states, led by Tasmania and Queensland
Business confidence has weakened to its lowest level in 15 months, according to NAB’s Q1 Business Survey, although business conditions have held up reasonably well, suggesting activity is maintaining some momentum.
The survey found confidence dropped to -4 index points, while conditions eased by one point to 7. All three sub-components of conditions declined, though they remain above levels seen through much of 2025.
Industry and State Breakdown
Conditions fell across most industries, with wholesale, manufacturing and construction being the exceptions. Five of eight industries recorded positive conditions, led by finance, property and business services, followed by construction.
Confidence declined across all industries except mining. Mining, manufacturing and construction are now the only sectors in positive confidence territory.
All states recorded positive conditions, with Tasmania (14) and Queensland (12) the strongest.
Labour Pressures Persist
Wage costs were again cited as the biggest issue affecting business confidence. The share of firms reporting labour as a significant constraint rose during the quarter, indicating the labour market remained tight entering 2026.
NAB Head of Australian Economics, Gareth Spence, said the survey pointed to a softening in sentiment rather than a sharp deterioration in activity.
“Overall, the Q1 survey shows that while confidence has weakened, conditions have broadly held up and that there remains some momentum in activity despite businesses having shed some optimism,” he said.
