Economic Commentary

9 December 2025

Confidence and conditions fall in November

Business confidence fell 5pts (unrounded) in November, retracing some of the gains made over the past 6-months. Business conditions fell 3pts (unrounded) in the month, as falls in profitability and trading more than offset the minor gain in employment. Weakness was broad based across industries and geographies. Other indicators of activity in the survey also weakened as both forward orders and exports fell in the month (falling 2pts and 1pt respectively). Despite a weaker tone to the November survey, the rise in the trend measures of business confidence and conditions series remains intact. Further, capacity utilisation rose for the fourth consecutive month and is now above the long-run average in 6 of 8 industries in trend terms (up from 5 industries last month). Capacity utilisation is now at an 18-month high and is running over 2ppts above its long-term average. This will add to concerns that the domestic economy is close to pushing up against capacity constraints.

Comments from NAB Chief Economist, Sally Auld

Business confidence and conditions fell 5pts and 3pts respectively in November. The falls retraced recent gains and now both measures sit a little below their respective long-run averages for the first time in 6-months.

“While the November result shows a break in the recent positive momentum in the survey, business conditions remain well above their early 2025 levels.” said NAB Chief Economist Sally Auld. 

“The fall in confidence in November, in contrast, takes the measure back to more subdued levels early in the year.”

The fall back in confidence and conditions was broad based as all sectors were flat or declined. However, in trend terms manufacturing was the only industry with business conditions in negative territory while wholesale and mining were the only industries with negative confidence.

“The softer result in November has been broad across industries in the survey.” Said NAB Chief Economist Sally Auld.  

Even as activity eased in November capacity utilisation rose further to 83.6%, the highest it has been in 18 months. Despite easing in trading conditions, profitability and forward orders the economy remains capacity constrained at its current level. We expect policy to remain sensitive to any further acceleration of either growth or inflation going forward.

“The capacity constraints in the economy have remained broad based with 6 of 8 industries in November above their respective long-run averages in trend terms, the highest in over a year”

Purchase cost growth rose to 1.3% in quarterly equivalent terms. Labour cost growth eased a further 0.1ppts while product price growth remained steady at 0.6% and retail prices growth rose to 0.8%.

“Overall, the survey continues to tell us that businesses are capacity constrained and that if economic growth accelerates further from the current starting point, we may quickly see additional pressure on prices”.

While profitability and trading conditions unwound some of their recent gains in the month, employment has been steadier.

“Looking ahead, labour demand should remain supported by the stronger trend in broader conditions and as businesses continue to respond to higher capacity utilisation”.

For more information, please refer to the full report or contact 
Sally Auld +(61 0) 422 224 752

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