Key Points:
- Economic conditions continue to worsen according to the latest survey data from Roy Morgan, ANZ and NAB.
- RBA Assistant Governor says the central bank expects home building activity to be low in 2027 and 2028.
- Construction and mining lead the collapse in business confidence in August 2026 compared to the same period in 2025.
- Business confidence fell in NSW and across the country Confidence in NSW fell 12 points in August compared to the same time a year ago.
As Master Builders CEO Matt Pollock has said, “construction is the canary down the inflationary coalmine” and now business confidence across the country is being severely challenged as enterprises in the wider economy see their margins eaten into by the elevated cost of inputs.
The evidence from the NAB’s latest survey of businesses confidence in August “shows cost-side pressures were increasingly flowing through to business profitability and activity.”
This comes as the Reserve Bank of Australia’s Assistant Governor (Economic) Sarah Hunter told the Australian Financial Review’s Property Summit that inflation is proving even stickier than the RBA had thought and that another interest rate increase could be on the cards this month.
This appears to validate the market’s now locked in assumption that rates will rise again later this month.
The Reserve Bank's Deputy Governor Andrew Hauser told the ABC TV 730 program that the RBA has a dual remit to keep inflation under control while pursuing full employment. The problem is that as history has shown at times of stubbornly high inflation, these two objectives may be at odds.
Worryingly for our industry, the Assistant Government said the RBA expected levels of new housing construction to fall in both 2027 and 2028.
The NAB’s Business Confidence and Business Conditions indices fell in August into negative territory for the first time in 6 years and well below their long-run average levels. The decline was driven by a 10pt fall in profitability and a 5pt fall in trading conditions,
The NAB suggests that the result is pointing to the extremely bad scenario where economic growth is very low but inflation remains high.
At the industry level, collapsing confidence was led by construction, mining and manufacturing
Business confidence is consistently down in 2026 in NSW and across the country,
The latest Roy Morgan Business Confidence Survey shows that year on year national business confidence is 19.5 points below what it was in 2025. The Survey also found that 48% of businesses say that now is not a good time to invest.
Across the state jurisdictions, business confidence is languishing and record low levels.
- In NSW business confidence is tracking at just 74.8 points in August 2026, down more than 12 points on a year ago.
- Business confidence in Qld fell more than 37 points from the same time last year.
- In South Australia business confidence fell 27.6 points from a year ago. A substantial drop that only looks vaguely positive in comparison to business confidence in the larger state economies.
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Western Australia saw the largest collapse in the index with business confidence sitting only at 63.5 points, down a massive 62.2 points compared to the same time last year.
