Australia's NAB Business Confidence Index dropped to its lowest point in three months, registering a score of 4 in August 2025. This is a notable decline from the previously revised figure of 8 in the prior month, which marked the highest level since August 2022. Despite this decrease in confidence, business conditions experienced an upswing, improving from 5 in July to 7. This improvement was underpinned by consistent sales figures, maintaining a level of 12, enhanced profitability rising to 4 from 2, and an increase in employment levels, which climbed from 3 to 6. Forward orders also moved into positive territory for the first time in two years, advancing to 1.
In parallel, price pressures witnessed a further easing, with the rate of increase in purchase costs decelerating to a quarterly pace of just 1.1%, marking the slowest growth since 2021. Additionally, retail price growth diminished significantly, halving to 0.5%, while the escalation in labor costs also slowed, decreasing from 1.9% to 1.5%. According to NAB's chief economist, Sally Auld, regions and industries that had previously encountered challenges are now showing signs of progress, which is bolstering confidence that the wider economic landscape is on a path of improvement for the latter half of 2025. Sectors sensitive to economic cycles, such as manufacturing and retail, also experienced positive strides in both confidence and business conditions.
