Australian Businesses Edge Up But Remain Downbeat as RBA Prepares to Act

Australia's businesses are feeling slightly better about their prospects, but they're still cautious according to a recent survey by National Australia Bank (NAB). The survey found that business conditions improved in July, with a reading of +4 compared to +3 in the previous month. However, this is still below the long-run average of +7.

The survey also showed that confidence remains stuck at -6, suggesting that businesses are not convinced that current activity will last. NAB flagged 'cost pressures' as a major concern, even as demand looks softer ahead. This can squeeze profits and lead to price increases rather than absorbing higher expenses.

Capacity utilization, which measures how hard businesses are running their people and equipment, jumped to 83.0%, indicating that there isn't much spare room in parts of the economy. This is a concern for the Reserve Bank of Australia (RBA) as it prepares to set interest rates.