October Monthly Business Survey – Business conditions rise

13 November 2025 
Economy and Markets

NAB’s Chief Economist Sally Auld says the improvement seen in recent surveys is broadening.

• Business confidence dipped slightly in October but remains above its long-run average after mid-year gains.
• Business conditions strengthened to +9 index points, driven by improved trading and profitability, with retail and wholesale showing notable rebounds.
• Momentum in activity and benign cost pressures point to sustained recovery and support for private sector employment growth.

Overview

Business confidence fell 2pts (unrounded) in October, but remains just above its long run average after improving through mid-2025. Business conditions rose 2pts (unrounded) in October to +9 index points, driven by a rise in trading conditions and profitability (up 5pts and 3pts respectively). By industry, the rise in conditions was driven by notable increases in retail and wholesale, both of which have been weak for an extended period despite the improvement in consumer spending over the past year. That said, in trend terms, conditions remain most favourable in the mining and services sectors. Overall, the positive trend in business conditions suggests the economy has held onto the momentum gained since late 2024. Capacity utilisation, which in trend terms is at or above average in 5 out of 8 industries, suggests that the level of activity remains high. This, alongside the improvement in trading conditions and profitability, should further facilitate the ongoing recovery in private sector employment growth. Encouragingly, despite the strength on the activity side, the cost and price measures continue to look relatively benign and have now largely returned to their average pace of increase since the survey’s inception. Key to the policy outlook will be whether the mix of strength in activity indicators and well-behaved cost and price indicators evident in this month’s survey can be sustained.

Comments from NAB Chief Economist, Sally Auld

The index measuring business conditions rose 2pts (unrounded) to +9 index points in October to its highest level since March 2024. The drivers of improving conditions were trading and profitability, which were up 5pts and 3pts respectively, while employment remained flat in the month.

“Business conditions improved further after consolidating near average over recent month. This is encouraging as it looks like not only has the economy maintained the improved momentum in the private sector gained in H1 2025, but also that private sector activity has strengthened a little further” said NAB Chief Economist Sally Auld.

Both trend conditions and confidence are also in positive territory across all states and territories for the first time since September 2022. Trend confidence remains the strongest in Queensland and weakest in Tasmania; however, the gap between the strongest and weakest states narrowed in October.

“The improvement we have seen across the survey is broadening,” said NAB Chief Economist Sally Auld.

Purchase cost growth fell to 1.0% in quarterly equivalent terms. Labour cost growth eased by 0.1ppts while product price growth edged down to 0.5% and retail prices growth was 0.7%.

“Cost and price pressures in October and are close to their historical long-run average rates, though a little above the immediate pre-pandemic period”, said Dr Auld. “However, capacity utilisation remained high in October, and edged up to 83.4% to sit 2ppt above the long run average. This suggests the risk that cost pressures re-emerge, should the better tone in the activity indicators in the survey be sustained.”

“Overall, the survey is sending us the same message as a range of other economic data. Economic growth has improved but we are starting at a point with little slack in the economy. Capacity utilisation is still high and wage and margin pressures continue to be significant factors impacting business confidence.”

“Improving trading conditions and profitability should eventually translate to labour demand, which should mean the labour market remains healthy in the near-term”.

For more information, read the October NAB Monthly Business Survey (PDF, 715KB).