Australian Business Conditions Stabilize Amid Rising Costs: NAB Report

Australian business conditions have stabilized with signs of recovery, according to NAB. Despite rising costs, the country's economy is showing signs of improvement. The Australian shares have risen, and the latest news from ASX 200 highlights positive trends. The RBA's easing and weaker currency can cushion Australia's economy from global shocks, ANZ Research says.

Australian business conditions have shown signs of stabilization, according to the latest report from National Australia Bank (NAB). Despite rising costs, the country's economy is exhibiting positive trends, with Australian shares experiencing an uptick. The Reserve Bank of Australia's (RBA) easing cycle and a weaker Australian dollar are helping to cushion the economy from global shocks, as per ANZ Research.

NAB's Business Conditions Index (BCI) jumped 9 points last month to the highest level in over a year, indicating a recovery in the corporate sector. This improvement is in line with the RBA's easing cycle. Confidence also climbed by 3 points, marking the third consecutive monthly gain. Forward orders and capacity utilization also advanced, signaling a potential upturn in economic activity. Gareth Spence, head of Australian economics at NAB, commented that the data suggests an improvement in conditions, with sluggish momentum in early 2025 expected to pick up in the second half of the year [1].

The RBA is widely expected to lower its key rate to 3.6% in its first back-to-back cuts since 2019. This move comes as inflation is under control, with annualized inflation at 2.1%. The data also precedes US President Donald Trump's tariff plans, which have caused market volatility and fears about global growth. Trump has threatened to impose higher tariffs on key trading partners, including Japan and South Korea, with the first wave of letters unveiled on Monday [2].

The latest news from the ASX 200 highlights positive trends, with companies like Amcor and Aristocrat Leisure performing well. Amcor, a key player in the global packaging sector, has broadened its market footprint through a merger with Berry Global. This merger has enhanced its access to higher-margin markets and reinforced its role in rigid packaging and healthcare materials. Aristocrat Leisure, a leading developer in gaming content and electronic gaming machines, has expanded its global presence and diversified its product suite to include land-based gaming devices and mobile gaming apps [3].

The RBA's expected interest rate cut will bring immediate relief to mortgage holders. For a typical Australian mortgage of $600,000, this could mean a reduction in repayments of about $90 per month. This cumulative savings provide crucial breathing room for households, especially after a prolonged period of high rates. The impact of these cuts is more than just numbers: the share of mortgage holders considered 'At Risk' of mortgage stress is projected to fall from 26% to 24.7% after the July cut, equating to about 99,000 fewer households under financial pressure [3].

The Australian economy is showing signs of recovery, with business conditions stabilizing and shares rising. The RBA's easing cycle and a weaker Australian dollar are helping to cushion the economy from global shocks. The expected interest rate cut will provide immediate relief to mortgage holders, further boosting the economy's resilience.

References:

[1] https://www.bloomberg.com/news/articles/2025-07-08/australia-business-conditions-and-confidence-jump-ahead-of-rba
[2] https://kalkinemedia.com/au/stocks/consumer/amcor-and-aristocrat-leisure-shine-on-the-asx-200-radar-this-month
[3] https://economictimes.indiatimes.com/news/international/australia/rba-to-cut-interest-rates-in-july-what-this-means-for-australian-homeowners/articleshow/122287311.cms?from=mdr