Australia’s business sentiment improved slightly in May but stayed deeply negative, signaling persistent economic weakness and margin pressures.
Australia’s NAB business confidence index rose to -14 in May from -23 in April, though sentiment remained negative across all industries. Business conditions held steady at +3, ending four months of declines but still reflecting weak profitability and cost pressures.
The improvement offers limited relief as capacity utilization dropped below 82%, the lowest since early 2025, reinforcing signs of an economy losing momentum. Cost pressures eased only marginally, complicating the inflation outlook amid global energy price volatility.
The data suggests the Reserve Bank of Australia is unlikely to shift its easing bias in the near term, as the economy muddles through without sharp deterioration or recovery.