Business conditions rebound, confidence lifts – NAB Monthly Business Survey

08 July 2025
Economy and Markets

The June NAB Monthly Business Survey suggests business conditions are stabilising, if not starting to turn around after a disappointing start to the year.

Business confidence rose 3pts to its highest level in trend terms in over a year, with strength in construction and continued weakness in retail and wholesale.

“After a volatile but soft year for business confidence, we have seen a trend improvement over the past three months,” said Gareth Spence, NAB Head of Australian Economics.

Business conditions jumped to 9 index points, lifting the trend for the first time this year. Trading rose 10pts, profitability 8pts, and the employment index 3pts.

“Business conditions increased sharply in the month driven by notable improvements in trading conditions and profitability,” said Spence. “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”.

Conditions improved across most industries, with manufacturing and retail rebounding after May declines, and services sectors continuing to lead in trend terms.

Capacity utilisation rose to 83.3%, capex lifted to +10 index points, and forward orders continued to improve but remain just below average.

Price indicators were mixed: labour cost growth edged down to 1.5%, purchase costs rose to 1.5%, and final product prices nudged up to 0.6% while retail price growth slowed to 0.6% (from 1%).

“Overall, the survey is encouraging that sluggish momentum in early 2025 will improve into the second half,” said Spence. “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 more information, please see the NAB Monthly Business Survey (June 2025) (PDF, 270KB).