Trump tariffs may further impact confidence going forward
NAB’s business confidence indicator plummeted to -3 in March, with the banking major stating that an uptick in profitability was offset by lower trading conditions and employment.
It marks the lowest point for business confidence since November 2024.
While industry conditions improved across most sectors, construction, retail and recreation and personal services dragged the indicator lower.
The February print was also revised lower to -2 (from -1), following an upwardly revised +5 in January.
“Confidence remains in negative territory and well below the long-run average,” said NAB’s newly appointed chief economist Sally Auld. “This was before the reciprocal tariff announcements in early April, which may flow through to forward looking measures in the next survey.”
US president Donald Trump’s global tariff regime has caused widespread confusion and volatility across all major markets. Although it could have drastic implications for the rate of goods exported to the world’s largest consumer market, the tariffs are also increasing the likelihood of quicker-than-expected interest rate cuts from the Reserve Bank of Australia.
A recent AFR poll showed that 29 out of 40 economists expect another cut when the Reserve Bank of Australia (RBA) convenes on 20 May. If their predictions are accurate, it would mark the second rate cut this year, bringing the cash rate down to 3.85%.
Businesses remain cautious about the outlook, with confidence and conditions both below average. We will be looking to see how recent tariff announcements flow through to business sentiment in upcoming surveys.” Said Auld.
