The NAB Monthly Business Survey for June suggests that while Australian businesses remain under pressure, the operating environment stabilised and inflationary pressures continued to ease. Business conditions were steady at +3 index points for the third consecutive month, remaining below the long-run average and consistent with a subdued pace of economic activity. Business confidence improved by 9 points to -5, its strongest level since February, although sentiment remains in negative territory as businesses continue to navigate softer demand and elevated uncertainty.
The improvement in confidence during the month was supported by an easing in geopolitical concerns following the initial de-escalation of tensions in the Middle East. The June survey suggests that businesses were not impacted as significantly as initially feared during the first phase of the conflict, with confidence recovering despite ongoing global uncertainty. However, it is important to note that the survey period does not capture the recent re-engagement of hostilities in the Middle East following the breakdown of the ceasefire. The renewed escalation highlights the heightened volatility facing global markets and the potential for external shocks to rapidly alter the economic outlook.
Underlying activity indicators were mixed. Trading conditions, profitability and employment measures all remained subdued, consistent with an economy operating below trend. Capacity utilisation also eased further during the month, indicating additional spare capacity across the business sector. While this moderation in demand should continue to support the disinflationary process, it also reflects the ongoing pressure on businesses from prolonged restrictive financial conditions.
Source: NAB Monthly Business Survey, June 2026
A key positive from the survey was the general easing in cost and price pressures. Labour cost growth remains elevated, and purchase cost growth softened. Final product prices also declined during the month, including a fall in retail prices, providing further evidence that inflationary pressures across the business sector are continuing to unwind.
However, the recent increase in geopolitical tensions introduces a renewed source of uncertainty for the inflation outlook. Oil prices have risen again amid escalating tensions in the Middle East, creating the potential for renewed energy cost pressures and broader supply chain disruptions. While the June survey demonstrates that businesses had, to date, absorbed the initial shock relatively well, a sustained increase in commodity prices or prolonged disruption to global trade flows could place renewed upward pressure on inflation and weigh on business confidence in the months ahead.
Source: Australian Bureau of Statistics, Business Conditions and Sentiment, June 2026.