Businesses focus on future-proofing amid continued uncertainty
15 Oct 2026 | Nathan Wallwork, Head of Economics and Policy
2026 has already been a long and tough year for many NSW businesses
The economic consequences of war in the Middle East have had a lasting impact on local business conditions.
While business confidence across the state improved modestly in the September quarter after record lows in June, the index remains firmly negative at -65.0, up from -78.0. The outlook for next quarter is for modest improvement again, to -47.3.
One battle after another: Are businesses prepared for the next shock?
Against this backdrop, the latest Business NSW September 2026 Business Conditions Survey explored how businesses are preparing for future challenges, including the adoption of AI, investment in resilience and the assessment of infrastructure needed to support growth.
The results indicate that while businesses are taking steps to strengthen their resilience, many remain vulnerable to another significant economic shock.
Just 9% of businesses reported they are now better prepared to manage a disruption of a similar magnitude to the fuel crisis from earlier this year, while 21% said they are less prepared because they are still recovering from the last shock and a further 12% indicated another shock of that scale could force their business to close.
With diesel prices in NSW trending back up past $2.80/litre, it’s clear the economic consequences of the conflict are still with us.
Businesses are reporting increased benefits from AI use
At the same time, businesses are looking for ways to improve productivity and adapt to a changing operating environment.
Our quarterly survey now tracks how businesses are using AI in their operations. Nearly half of businesses (46%) reported an increase in their use of AI over the past three months. Among these businesses, almost two-thirds (65%) said they had achieved the benefits they were seeking from increased usage. Adoption is not universal: 19% of respondents reported that they had not used AI in their business operations in the past three months.
These findings suggest many businesses are increasingly turning to AI to improve efficiency, manage costs and remain competitive as they respond to ongoing operating pressures.
Investing in infrastructure to meet future challenges
Across NSW, businesses remain concerned about whether the infrastructure needed to support future growth is keeping pace with demand. Infrastructure preparedness was rated poorly across all categories, including water, housing and other enabling infrastructure, with public transport receiving the lowest future-readiness score at 1.6 out of 5.
These concerns were particularly pronounced in regional NSW, where businesses continue to view infrastructure as a critical enabler of housing supply, productivity, investment, and economic growth.
