Australian Business Confidence Rebounds in June
Synopsis
Business conditions were unchanged for a third consecutive month, while confidence improved as cost pressures eased.
Key Highlights
- For a third consecutive month, the NAB business conditions index was unchanged on 3 June.
- Business confidence was lifted to 5-14 in May.
- With the US-Iran peace deal, cost pressures were gone by early O1 but oil prices started to spike again months later with renewed conflict.
National Australia Bank, the latest business survey shows Australian business conditions were little changed in June, but improved on a backdrop of falling cost pressures and renewed momentum in US-Iran peace talks with some improvement in matching demand for labour.
Data showed the business conditions index held at 3 for the third straight month, while business confidence improved to 5 from 14 in May
NAB stated the improvement was driven by positive input from the Middle East after an agreement between the United States and Iran to resolve an ongoing conflict that had pushed energy prices higher on a global scale.
Cost Pressures Ease
Product price growth slipped back to its February pace in June, the survey indicated a dip in retail prices for only the second time in seven years.
NAB added that the results were in line with moderating activity growth shown over H1 2026, but suggested the fallout from tensions in the Middle East over business activity and inflation would be weaker than expected.
Oil Prices Rise on Renewed Tensions in the Gulf
But the downward trend in business costs may be temporary as tensions flared again in the Gulf. Brent crude was up 2% to US$85 a barrel, its strongest since mid-June, following the military strike by the United States on Iran consensus lifted shipping through the Strait of Hormuz last access built over 10%.
In response to the global energy shock, the central bank of Australia raised rates for 3 times this year and now has an interest rate of 4.35%. The central bank kept rates on hold in June but warned that further tightening could not be excluded.
Source: Reuters
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