Australian exports to the US dropped sharply by 57.6 per cent in April 2025 in the wake of US President Donald Trump’s erratic tariff announcements, NAB’s July Business Pulse has found.

NAB says the steep drop in exports to the US shows that Australian businesses were rapidly adjusting to shifts in the global news cycle and finding new opportunities where possible.

“It may be that we’re all getting used to the ongoing volatility. Certainly financial markets appear to be adjusting to the new US administration’s way of doing things and prolonged war between Russia and Ukraine as well as ongoing hostilities across parts of the Middle East have, to some extent, inured many to ongoing international conflict,” NAB executive Julie Rynski wrote.

Rynski noted that the drop in Australian exports to the US indicated that businesses were adapting rapidly to shifting business conditions. While exports to the US plummeted, shipments to China rose by 0.5 per cent, indicating stable demand from Australia’s largest trading partner.

Despite global economic volatility, NAB’s Monthly Business Survey found that business confidence rose by 3 points in June, reaching its highest level in over a year.

Meanwhile, business conditions increased by eight points, driven by gains in profitability and trading conditions.

“The rebound in profitability is encouraging, particularly if sustained as there was a risk that ongoing weakness in profitability would eventually flow through to weaker hiring and employment conditions,” NAB’s head of Australian economics, Gareth Spence, said.

Capacity rose for the second consecutive month in June and climbed above its long-run average, NAB found. Labour cost growth nudged slightly downwards, while purchase cost growth increased.

Trading conditions were up 10 points, profitability eight points and the employment index three points in June. The manufacturing and retail sectors saw large gains after notable falls in May.

In trend terms, business conditions were strongest in recreation, finance, property and business while they were weakest in manufacturing and retail.

NAB’s July Business Pulse also indicated that firms expected the RBA to cut the cash rate to 3.10 per cent by the end of the year. On Tuesday, the Reserve Bank made a shock decision to hold interest rates at 3.85 per cent, surprising markets and economists.

Following the RBA’s decision to hold, Commonwealth Bank and ANZ economists said they expected two more interest rate cuts in August and November, bringing the cash rate to 3.35 per cent.

Westpac predicted four more cuts in August, November, February and May, which would bring the cash rate to 2.85 per cent, while NAB expected three cuts in August, November and February, bringing the cash rate to 3.10 per cent.

NAB economists said June’s sharp rise in business conditions and confidence was encouraging for the rest of the year’s outlook, indicating that Australia’s economy may have turned a corner.

“Overall, the survey is encouraging that sluggish momentum in early 2025 will improve into the second half, with a notable increase in conditions in the month,” Spence said.

“An improvement in confidence is also welcome given the raft of negative headlines globally over recent months.”