The June NAB Monthly Business Survey indicates that business conditions are stabilizing, with signs of improvement following a challenging start to the year. Business confidence increased by 3 points, reaching its highest trend level in over a year. The construction sector showed strength, while retail and wholesale remained weak.
Gareth Spence, NAB Head of Australian Economics, commented on the trend improvement over the past three months: “After a volatile but soft year for business confidence, we have seen a trend improvement over the past three months.”
Business conditions rose to 9 index points for the first time this year. Trading improved by 10 points, profitability by 8 points, and the employment index by 3 points. Spence noted: “Business conditions increased sharply in the month driven by notable improvements in trading conditions and profitability. The rebound in profitability is encouraging, particularly if sustained as there was a risk that ongoing weakness in profitability would eventually flow through to weaker hiring and employment conditions.”
Improvements were observed across most industries. Manufacturing and retail sectors rebounded after declines in May, while services sectors continued leading in trend terms.
Capacity utilization increased to 83.3%, capital expenditure rose to +10 index points, and forward orders improved but stayed slightly below average.
Price indicators showed mixed results: labor cost growth decreased to 1.5%, purchase costs rose to 1.5%, final product prices slightly increased to 0.6%, while retail price growth slowed from 1% to 0.6%.
Spence concluded: “Overall, the survey is encouraging that sluggish momentum in early 2025 will improve into the second half. 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.”
For further details, refer to the NAB Monthly Business Survey (June 2025).