NAB’s Employment Index Fell to a Five-Year Low and Confidence Sits in the Bottom 5% of the Survey’s History. Your Self-Employed Client’s Last Lodged Return Describes a Different Year

On 13 October, NAB released its Monthly Business Survey for September. Business confidence fell for a third consecutive month to −13 index points, a reading the survey itself places in the bottom 5% of observations in its own history. For brokers, the number that matters more sits one line below it: the employment index fell 3 points to its lowest level in five years.

What the September survey actually recorded

NAB’s Monthly Business Survey for September 2026 was conducted from 23 to 30 September across around 296 businesses in the non-farm sector. Business confidence fell 4 points to −13 index points, against a long-run average of 4 — 18 points below that average, and 22 points lower than a year earlier. The survey notes that September’s level of confidence is now in the bottom 5% of observations in the history of the series.

Business conditions were flat at −1 index point, 7 points below their long-run average of 7. That stability is composite rather than real. Trading conditions rose 1 point to 4 and profitability rose 3 points to −5, and those small gains were offset by a 3-point fall in the employment index to −1 — its lowest reading in five years. All three subcomponents now sit well below their long-run averages.

The cost side has not moved in brokers’ favour. Purchase cost growth edged up 0.1 percentage points to 2.4% at a quarterly rate while final product price growth was flat at 0.8%, and labour cost growth eased 0.1 percentage points to 1.7%. The survey describes the gap between purchase cost growth and product price growth as continuing to widen, with businesses facing pressure on margins. Forward orders fell 1 point to −1 index point, around 7 points below both their February level and their long-run average. Cash flows recorded another negative reading.

Two readings cut the other way, and they matter for anyone tempted to treat this as a uniform downturn. Capacity utilisation eased 0.2 percentage points to 82.3% but remains around 1 percentage point above its long-run average, and rose in five of eight industries. The capital expenditure index has risen for three consecutive months and now sits above its long-run average. NAB’s own commentary calls the combination of weak confidence, cost pressures, above-average capacity utilisation and softer profitability “unusual”.

Why the national number is the least useful part

A national net balance tells you almost nothing about the panel beater, the physio practice or the civil contractor sitting in front of you. The industry and state splits do, and in September they were wide.

On trend business conditions, mining read +13 and finance, business and property +10, with transport and utilities at +7 and construction at +5. Wholesale sat at 0. Below the line, recreation and personal services read −2, manufacturing −9 and retail −13. Confidence fell in five of eight industries during the month, and in trend terms confidence remains negative in every industry except mining.

The state picture is just as uneven. Trend conditions in Western Australia read +16, Tasmania +8 and South Australia +3, against New South Wales at 0, Queensland at −1 and Victoria at −3 — the weakest state reading — with the national trend at +1. On trend confidence, New South Wales was weakest at −12 and Tasmania the only state in positive territory at +3.

For a broker, that dispersion is the operative fact. A WA-based earthmoving business and a Victorian retailer are not in the same economy this quarter, and a servicing assessment built on the assumption that last year’s profit carries forward is more fragile in one of those files than the other. The exposure is not evenly spread across your book, which means neither is the work.

The document gap on a self-employed file

Here is the structural problem the survey exposes. Full-doc self-employed assessment is, by design, backward-looking. The documents a lender asks for describe completed financial years. The business is trading now.

Thinktank’s residential credit guidelines distributed through AFG Align illustrate how firmly that look-back is fixed. The self-employed full doc pathway asks for the last two years of lodged company or business tax returns and financial statements, plus the last two years of lodged personal tax returns and income statements for all borrowers and guarantors. The guidelines state that after 1 April 2026, June 2024 and June 2025 returns are required. Income for servicing is calculated as net profit before tax plus acceptable add backs.

Read that against the September survey and the issue is plain. A FY25 return closed on 30 June 2025. The trading conditions NAB measured in late September 2026 are more than a year further on, and the survey points to further slowing from here. Nothing about that makes the return invalid — it remains exactly what the policy asks for — but it does mean the gap between the document and the business is more likely than usual to be material, and more likely than usual to be in one direction.

Some policies name a shorter look-back on conditions. BCU’s policy, at RP 1.14 dated 10 July 2026, allows one year of full business and personal tax returns plus notices of assessment, not annualised, where the LVR is 80% or less, the loan is non-LMI, and the applicant has been self-employed for at least 12 months. The LMI pathway reverts to the last two years. That is a narrower window on an older year, not a window on current trading.

The more useful observation is that the bridge is already written into policy. Bank of Sydney’s credit policy guide, dated 1 September 2026, requires the standard two years of returns and notices of assessment for individuals, or two years of returns and accountant-prepared financial statements for corporate and trust borrowers, with tax status confirmed through the Tax Portals and Integrated Client Account Portal for each self-employed borrower and guarantor. It then lists, as additional supporting information, business activity statements covering the trading period since submission of the most recent taxation returns, and written advice from an accountant or tax adviser confirming actual or likely income levels.

Bank of Sydney’s document describes itself as a guide only and not the full version of its home loan policy, and every position above is current only to the document named. Confirm the requirement with the lender or your BDM before you build a file around it.

Where a softening year collides with a variance rule

Mid-doc and alt-doc pathways are the obvious answer for a self-employed client whose paperwork is behind, and they are also where a deteriorating trading year does the most damage — because those pathways are built on consistency tests.

On Thinktank’s mid doc pathway, the income self-certification form must be supported by one of an accountant’s declaration form, the last two BAS, the last six months of trading bank statements, a one-year tax return plus notice of assessment, a one-year accountant-prepared financial statement, or a one-year return and notice of assessment plus a one-year financial statement. The guidelines state that the variance between the self-certification form and the additional verification method cannot be greater than 30%.

Consider what that means when turnover is falling. A client who self-certifies from a stable memory of last year, verified against six months of trading bank statements reflecting a softer current year, can breach a 30% variance test without anyone misleading anyone. On the BAS pathway, the same guidelines provide that enhanced verification may be requested where the variance across two quarters is greater than 30%, and that income for servicing is the lesser of actual self-declared income or 40% of gross business turnover, with higher turnover scenarios requiring Head of Credit approval. Six months of trading bank statements must be in the name of the earning entity and dated within six weeks of the application date.

None of those thresholds has changed. What has changed is how easy they are to trip. A broker who sets the self-certified figure from current trading rather than last year’s profit is not being conservative for its own sake — they are avoiding a variance referral that costs a week and, in the worst case, a decline that now has to be explained to the next lender.

What this does, and does not, do to your best interests record

It is tempting to read a weak business survey as a compliance event. It is not. No obligation moved on 13 October, and a macro data release does not create a new duty.

What it does affect is the quality of the inquiry behind a recommendation. ASIC’s Regulatory Guide 273 sets out how the regulator assesses compliance with the best interests obligations in Part 3-5A of the National Credit Act, and the duty itself sits in sections 158LA and 158LE. RG 273.7 defines mortgage brokers, by reference to section 15B, as persons who carry on a business of providing credit assistance in relation to credit contracts secured by mortgages over residential property, who do not act as the credit provider in relation to most of those contracts, and who provide credit assistance in relation to credit contracts offered by more than one credit provider.

The connection to a self-employed file is a practical one rather than a new rule. If the income position you relied on was a year old and the business had visibly changed, the recommendation rests on a weaker foundation — and the file will show it. A short, dated note recording what the client said about current trading, what document was obtained to test it, and why the income figure used was adopted is ordinary good practice that happens to be worth more in a quarter like this one. How your licensee wants that recorded is a question for them, not for this article.

Where the duty stops when you diversify

A softening business economy pushes brokers toward commercial and asset finance, and it is worth being precise about where the best interests duty travels with you and where it does not.

RG 273.5 states that the best interests obligations apply only in relation to credit products regulated under the National Credit Act — that is, products provided to consumers for personal, domestic or household purposes, or for the purchase or improvement of residential investment property. RG 273.133 then makes clear that, as a mortgage broker, the duty applies to any credit assistance you provide, including credit assistance on products packaged with a mortgage and on standalone credit products. RG 273.134 states that the duty does not apply in relation to non-credit products such as insurance, and that you must not imply that it does.

Example 12 in RG 273 makes the consequence concrete: an intermediary who tells consumers the best interests duty applies to them when it does not is likely to have engaged in misleading or deceptive conduct, prohibited by the ASIC Act and the National Credit Act.

That is general information about what the guide says, not advice about your licence. Whether a particular transaction is regulated turns on its purpose and structure, and getting that wrong in either direction has consequences — so the call belongs with your licensee or compliance adviser, on the facts of the deal.

What to watch next

NAB’s next Monthly Business Survey is due on 10 November 2026. The three readings worth watching are the employment index, which fell to a five-year low in September; forward orders, which sit around 7 points below their long-run average; and capacity utilisation, which at 82.3% remains the main piece of evidence against reading all of this as a broad contraction. The survey’s own framing is that it is unusual for capacity utilisation and business conditions to diverge for sustained periods.

If the employment index keeps falling while capacity utilisation holds above average, the self-employed files most exposed are the ones in industries carrying cost pressure without pricing power — which, on September’s numbers, is a description of retail and manufacturing more than of mining or professional services.

Sources. NAB Monthly Business Survey, September 2026, National Australia Bank, released 13 October 2026 (survey conducted 23–30 September 2026, around 296 non-farm businesses; next release 10 November 2026). ASIC Regulatory Guide 273 Mortgage brokers: Best interests duty, published 24 June 2020, at RG 273.5, RG 273.7, RG 273.133, RG 273.134 and Example 12. Lender policy positions are summaries of the following documents and are current only to them: AFG Align Thinktank Residential Credit Guidelines v20260817; Bank of Sydney Credit Policy, 1 September 2026 (described in that document as a guide only and not the full version of its home loan policy); BCU RP 1.14, 10 July 2026. Confirm any policy position with the lender or your BDM before relying on it.