The NAB survey points to an economy holding up better than feared but still operating under the shadow of elevated uncertainty, a combination that gives the RBA little reason to shift from its expecte
Alpha Score of 37 reflects weak overall profile with moderate momentum, poor value, weak quality. Based on 3 of 4 signals — score is capped at 90 until remaining data ingests.
Australian businesses are managing better than many expected, but confidence remains too weak to call a clear recovery, a National Australia Bank survey showed Tuesday.
The NAB business conditions index rose a point to +4 in July, still below its long-run trend of +7. Confidence was unchanged at minus 6, well below the level recorded in February before the conflict in the Middle East escalated, NAB said. The bank said elevated uncertainty continued to weigh on sentiment, even though actual outcomes have improved relative to the worst of the crisis's impact.
Cost pressures were a persistent theme, particularly through transport and utilities. Fuel price swings tied to renewed Gulf tensions drove the rise in both purchase costs and final prices, NAB said. The firm noted that cost pressures, combined with a softer forward demand outlook, suggest margins will remain under pressure.
The RBA meets later Tuesday and is widely expected to leave its cash rate unchanged. Commonwealth Bank of Australia expects the central bank to hold rates through at least the rest of 2026.
Beneath the fragile headline, some underlying indicators showed firmer signs. Employment and profitability both picked up, and sales activity held steady. Capacity utilisation jumped to 83.0%, a rise NAB attributed largely to the finance, business and property sector as well as wholesale. That points to stronger activity in parts of the economy even as broader sentiment stays subdued.
A jump in capacity utilisation and steady sales suggest underlying demand is not collapsing. That should reduce any temptation for the RBA to soften its tone on future tightening when it releases its decision and accompanying communication at 2:30 p.m. Sydney time.
The RBA's language around near-term inflation risk will matter most for markets, given the ongoing cost pressures flagged in the NAB survey and the added uncertainty from Gulf tensions pushing oil prices higher.
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