Australia business conditions steady in May, mood still gloomy

SYDNEY - Australian business conditions steadied in May as sales strengthened a little, a survey showed on Tuesday, while confidence stayed gloomy as cost pressures squeezed profit margins.

The survey from National Australia Bank showed its index of business conditions held at +3 in May, ending four months of losses. Confidence improved modestly to -14, from a deeply pessimistic -23 in April.

"With global uncertainty persisting, the domestic backdrop softening and cost pressures remaining elevated, confidence remains very weak and in negative territory across all industries," said Michael Hayes, an economist at NAB.

"Of note, the profitability sub-component is furthest below its long-run average, suggesting margin pressures persist."

Measure of costs eased somewhat in May but remained high historically. Capacity utilisation fell below 82% for the first time since early 2025, consistent with softer economic growth.

The Reserve Bank of Australia has raised interest rates three times to reach 4.35% as it struggles to control stubborn inflation. Policymakers have been concerned businesses will pass on rising energy costs to consumers and stoke expectations of future inflation.

(Reporting by Wayne Cole; Editing by Jacqueline Wong)

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This story was originally published June 8, 2026 at 9:31 PM.