Australian business confidence falls further as oil prices surge

what happened

Australian business conditions were broadly stable in September, but confidence continued to weaken as oil prices surged amid renewed tensions in the Middle East. National Australia Bank’s survey, published on Tuesday, showed the business conditions index unchanged at -1. The continued decline in confidence points to a possible further deterioration in conditions, the survey said.

Confidence dropped 4 points to -13, well below its February level, before the conflict involving the US and Israel began. “Energy prices remain elevated, funding costs have risen and domestic growth has slowed in 2026,” NAB said. Confidence declined in five of eight industries, while mining, wholesale and retail recorded “some improvement” in sentiment.

In trend terms, confidence remained negative across every industry except mining. Global oil prices were extremely volatile in September after Iran-backed Houthi forces from Yemen carried out missile and drone attacks against Saudi Arabia. The conflict, described as an extension of broader US-Iran tensions, pushed oil prices higher and increased fears of persistent inflation.

The Reserve Bank of Australia raised its cash rate last month to a 15-year high of 4.60%, marking the fourth increase of the year. The central bank warned that additional tightening could be needed to contain inflation.

why it matters

Weaker confidence despite broadly unchanged conditions highlights the exposure of Australian businesses and markets to energy costs, inflation pressure and expectations for further Reserve Bank tightening.

instruments