Australia Business Sentiment Edges Higher

Australia’s NAB Business Confidence Index inched up to 3 in January 2026 from a downwardly revised 2 in the prior month, marking the highest reading since October. Meanwhile, business conditions weakened (7 vs 9 in December), due to declines in both sales (10 vs 16) and profits (8 vs 11), while employment held steady for the third straight month (at 4). On the cost side, both labour and input cost pressures continued to ease, while quarterly growth in retail prices slowed further to 0.3% from 0.5% in December. According to NAB economist Michael Hayes, “Measures of cost and price growth in the survey fell to new post-pandemic lows.” He added that “overall, the January survey showed the economy has retained most of its momentum gained through the past year and the level of activity remains high,” even as capacity utilisation has eased somewhat in recent months. The survey was conducted before the RBA raised rates by 25bp to 3.85% last week, the first hike in two years.