Business conditions in Australia stopped their downward slide in May as companies reported slightly better sales figures, according to a new survey released Tuesday. However, business confidence continues to remain pessimistic as rising expenses put pressure on company profits.
National Australia Bank’s latest survey found their business conditions measurement stayed at +3 during May, breaking a four-month streak of declining numbers. The confidence reading showed modest improvement, moving to -14 from April’s deeply negative -23.
“With global uncertainty persisting, the domestic backdrop softening and cost pressures remaining elevated, confidence remains very weak and in negative territory across all industries,” said Michael Hayes, an economist at NAB.
“Of note, the profitability sub-component is furthest below its long-run average, suggesting margin pressures persist.”
While cost measurements dropped slightly in May, they continue to run high by historical standards. Business capacity utilization dropped below 82% for the first time since early 2025, reflecting the country’s slower economic expansion.
Australia’s central bank has implemented three interest rate increases, bringing rates to 4.35% in efforts to combat persistent inflation. Officials worry that companies may transfer their increasing energy expenses to customers, potentially fueling expectations for additional price increases.
