Business activity in Australia remained largely steady in March, though confidence continued to deteriorate, a new survey from National Australia Bank (NAB) revealed on Tuesday. The report captures a snapshot of corporate sentiment just before escalating global trade tensions sparked by U.S. President Donald Trump’s tariff measures.
According to the NAB survey, the index of business conditions ticked up slightly by one point to +4 in March. Despite the uptick, the figure remains below the long-term average, suggesting a still-muted business environment.
However, business confidence showed further signs of weakness. The index fell by one point to -3, reflecting growing uncertainty among firms.
“Businesses remain cautious about the outlook, with confidence and conditions both below average,” said Sally Auld, NAB’s chief economist. “This was before the reciprocal tariff announcements in early April, which may flow through to forward-looking measures in the next survey.”
In early April, President Trump imposed a baseline tariff of 10% on all U.S. imports, with threats of even steeper duties targeting key trading partners such as China. These measures have since shifted the global economic landscape and rattled markets.
Consumer sentiment has also taken a hit. A separate index showed confidence dropped sharply from a three-year high in April, amid growing fears over the economic fallout of the new tariffs.
The financial market is now firmly expecting the Reserve Bank of Australia (RBA) to respond. While the central bank left interest rates unchanged last week, investors are increasingly convinced it will cut rates at its next meeting in May to cushion the blow to growth.
Interest rate swaps have already priced in a quarter-point cut from the RBA next month, with speculation mounting about the possibility of a larger 50 basis point reduction. Markets are also anticipating a full percentage point (100 basis points) of easing over the course of 2025.
Within the NAB survey, key components such as sales and employment remained mostly stable, and price pressures showed little change. Notably, the rate of capital utilisation — a gauge of how efficiently businesses are using their resources — rose to 82.9% from 82% in February, suggesting firms were marginally more active in deploying their capacity.
While the March figures show resilience in parts of the economy, the shadow of global trade disruptions looms large, with upcoming surveys likely to reflect a more volatile outlook.
Related topics:
Japan’s Real Wages Fall for Second Month Amid Inflation and U.S. Tariffs
New Zealand Sticks to Economic Plan Despite Global Trade Turmoil
