Conditions remain positive despite weaker sentiment, NAB survey finds
Business confidence has fallen while operating conditions have remained in positive territory, NAB’s first-quarter business survey has found, indicating that activity continues despite a more guarded outlook.
The survey put business confidence at -4 index points, the weakest result since December 2024. Business conditions eased by one point to 7, with declines across trading, profitability and employment, though the measure remains above its long-run average after gains through 2025.
“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.” said Gareth Spence (pictured top), head of Australian economics at NAB.
By sector, conditions slipped in most industries, with wholesale, manufacturing and construction the exceptions. Even after the quarterly declines, conditions were still positive in five of eight sectors, led by finance, property and business services, with construction next.
Confidence was lower in every industry except mining. Mining is now in positive territory alongside manufacturing and construction.
Source: NAB Quarterly Business Survey, Q1 2026
Across the states and territories, conditions eased everywhere but stayed above zero nationwide. Tasmania and Queensland recorded the strongest readings, at 14 and 12 index points respectively.
Cost pressures remained central to the mood. “Wage costs remained the biggest issue affecting business confidence and the share of firms reporting labour as a significant constraint rose in the quarter highlighting that the labour market has remained tight to start 2026,” Spence said.
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