NAB Economics' forecasts are largely unchanged, expecting a gradual moderation in inflation and unemployment to drift higher alongside a period of below trend growth.
Costs surge, activity cools in April business survey - NAB
12 May 2026
Economy and Markets
Economic update and trends
- Purchase cost growth lifted sharply to 4.5% in April, outpacing product price growth at 1.8%.
- Business conditions fell 3pts to +3 index points, confidence rose 5pts to -24.
- Forward orders fell a further 4pts in April to be down 11pts since February.
Accelerating cost pressures are squeezing margins and demand is cooling, with the latest NAB Monthly Business Survey signalling a tougher operating environment for Australian businesses.
Since the Middle East conflict first hit, cost and price measures in the business survey have continued to accelerate. Purchase cost growth (in quarterly terms) lifted sharply to 4.5% in April, outpacing final price product growth at 1.8%.
NAB Head of Australian Economics Gareth Spence said the survey showed activity starting to shift after holding up in last month's survey.
“Pressure on margins is increasing, as purchase cost growth is more than 1ppt higher than prices in all industries. In manufacturing and construction margin pressure is more extreme, with purchase cost growth 3.4ppt and 3.8ppt higher than price growth, respectively,” Mr Spence said.
“The survey suggests that rising prices and pressure on margins are beginning to affect activity and investment measures, as forward orders, capex, cashflow and employment have all fallen noticeably in recent months and are sitting well below their respective long-run averages.”
Business confidence rose 5pts to -24 index points, while business conditions fell for the fourth consecutive month, down 3pts to +3 index points and now sits well below its long-run average.
Forward orders fell a further 4pts in April to be down 11pts since February and is well below its long-run average, while capex fell 8pts, its largest one month fall in the post-covid period. Capacity utilisation fell to 82.5% in April and despite sitting at its lowest level since July 2025 remained well above its long-run average.
“The April survey highlights the challenges of the energy price shock for business: cost pressures rise while the outlook for future demand softens,” Mr Spence said.
Click below to read the full NAB Monthly Business Survey for April.
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