March business conditions continue on steady path, reveals NAB

The March edition of the NAB Monthly Business Survey has revealed business confidence fell 1 point to -3 index points over the month.

The survey found that while confidence slightly eased and remained in negative territory, there was a slight uptick in profitability.

Sally Auld, chief economist at NAB, said that by industry, conditions improved in all industries except construction, retail and recreation and personal services.

“Business conditions remain a little below average. In trend terms, conditions remain strongest in the services sector and weakest in manufacturing and retail,” she said.

“Confidence remains in negative territory and well below the long-run average. This was before the reciprocal tariff announcements in early April, which may flow through to forward-looking measures in the next survey.”

Despite the slight uptick noted in profitability, the survey highlighted that this was offset by slightly lower trading conditions and employment.

Other survey measures remained fairly steady, with +1pt improvements in forward orders and capex. Capacity utilisation also moved higher, rising from 82 per cent to 82.9 per cent, the highest monthly rate since September 2024.

Auld said the increase was driven by goods-producing industries, while consumer and services industries were stable.

“The uptick in capacity utilisation was the exception to an otherwise steady survey read,” she said.

“Businesses continue to report higher than average utilisation as activity remains robust in level terms, even if growth has been slow.”

By state, conditions were found to have significantly improved in South Australia from what was observed over February, while smaller improvements were noted in NSW, Victoria and Western Australia. Conditions were “substantially weakened” in Tasmania and fell for the third consecutive month in Queensland.

Additionally, purchase cost growth was steady at 1.4 per cent in quarterly equivalent terms, while labour cost growth eased slightly to 1.5 per cent, and final product growth was steady at 0.5 per cent in quarterly equivalent terms.

Overall, the survey suggested that businesses remain cautious about the outlook, with confidence remaining negative and overall conditions holding largely steady, Auld said.

“Businesses remain cautious about the outlook, with confidence and conditions below average. We will be looking to see how recent tariff announcements flow through to business sentiment in upcoming surveys.”