Overview

Business conditions were largely unchanged in March and remain a little below average. An uptick in profitability in the month was mostly offset by slightly lower trading conditions and employment. Confidence eased slightly and remains in negative territory. Elsewhere, most survey measures were fairly steady, with +1pt improvements in forward orders and capex. Capacity utilisation was the exception, rising from 82.0% to 82.9% in the month. This was driven by increases in utilisation in the goods production industries (mining, transport & utilities, construction and manufacturing) while capacity utilisation was steady in consumer facing and services industries. Price pressures were stable in March, with slight easing in labour costs and retail prices. Overall, the survey suggests that businesses remain cautious about the outlook with confidence remaining negative but overall conditions holding largely steady. The survey was taken prior to the significant shift in US trade policy announced in early April, and as such, does not reflect firms’ perceptions of the outlook post tariff announcements.

Comments from NAB Chief Economist, Sally Auld

Business conditions were largely unchanged in March. By industry, conditions improved in all industries except construction, retail and recreation & personal services.

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

Business confidence eased slightly. By industry, confidence was mixed with a notable improvement in mining and declines across finance, property & business services, manufacturing, wholesale and construction.

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

Forward orders and capex both rose by 1pt. Capacity utilisation moved higher, rising from 82.0% to 82.9%. This is the highest monthly rate since September 2024. The increase was driven by goods production industries, while consumer and services industries were stable

“The uptick in capacity utilisation was the exception to an otherwise steady survey read,” said Dr Auld. “Businesses continue to report higher than average utilisation as activity remains robust in level terms even if growth has been slow.”

Purchase cost growth was steady at 1.4% in quarterly equivalent terms, while labour cost growth eased slightly. Final product price growth was also steady at 0.5% in quarterly equivalent terms.

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

For more information, please see the NAB Monthly Business Survey (March 2025)