Business conditions drop into negative territory - NAB Business Survey August 2026

8 September 2026 
Economy & Markets, Business Banking 

• Business conditions fell 5 points to -1, turning negative for the first time in six years.
• Business confidence fell 2 points to -8 index points, now 12 points below its January level
• Profitability fell 10 points to -9 as input costs continued to outpace prices.

Business conditions dropped into negative territory in August as slowing activity and persistent cost pressures weighed on businesses across the economy. The August NAB Monthly Business Survey showed conditions fell 5 points to -1 index point, their lowest level since August 2020, while confidence fell 2 points to -8 index points.

NAB Head of Australian Economics Gareth Spence said the survey showed cost-side pressures were increasingly flowing through to business profitability and activity.

“Cost growth has been running well ahead of product price growth for almost six months, and we are now seeing those pressures flow through more clearly to profitability and business conditions,” Mr Spence said.

“Purchase cost growth remained elevated at 2.3% in quarterly terms, while product price growth eased to 0.8%. That widening gap is putting pressure on margins, with profitability falling 10 points in August to a new post-COVID low.

“The weakness is also becoming more broad-based across industries. Conditions fell across six of the eight industries surveyed, led by construction, mining and manufacturing, while trading conditions also moved lower.”

Business conditions fell in all states except New South Wales and Tasmania. Victoria and Western Australia recorded the largest monthly declines, both down 13 points, although trend conditions remained strongest in Tasmania and Western Australia.

Trading conditions fell 5 points to +4 index points and profitability fell 10 points to -9 index points. Employment eased 1 point to +3 index points and remained more stable than the other components of business conditions.

Forward orders rose 3 points to 0 index points, while capacity utilisation fell 0.6 percentage points to 82.5%, partially unwinding its July increase.

NAB Group Executive Business and Private Banking Andrew Auerbach said the findings reflected what he was hearing from business customers across the country.

"Our customers tell us it's tough out there. Higher costs, softer demand and ongoing uncertainty are putting some businesses under real pressure," Mr Auerbach said.

"While those challenges are being felt across the country, conditions vary across industries and regions.

"That's why understanding what's happening on the ground matters. The better we understand a business's circumstances, the better we can support them."

Read the full NAB August Monthly Business Survey.