There has been an unexpected increase in business confidence, despite widespread speculation about a tough federal budget, a new survey shows.

National Australia Bank's (NAB) latest monthly business survey shows confidence has edged up to a reading of six in April, from a post-election low of four in March.

NAB's chief economist, Alan Oster, says it is surprising, given the extensive rhetoric in the lead-up to tomorrow night's budget.

The April report shows an improvement in employment and stock levels, but there has been a slump in forward orders, suggesting a continued slow recovery for business in the months ahead.

Mr Oster says business confidence is usually driven by actual outcomes, so all eyes will be on next month's survey to assess how companies have responded to the budget.

"Consumer sentiment on some measures is down about 8 per cent in the last couple of weeks, so the fact that it even treaded water I think is a pretty good result," Mr Oster said.

"The focus should be on the fact that confidence didn't seem to be hurt much in a period where you thought it probably would've been, given what the Government's been signalling in terms of the budget."

Mr Oster says while actual business conditions eased last month, the resilience in sentiment is a stand-out from this latest survey.

In addition, Mr Oster has also changed his forecast on interest rates, saying a cut is no longer expected.

Mr Oster says the change in opinion has been driven by the recent strength of the labour market and the fact the cash rate is already at a record low.

"The Reserve is more likely to sit back and say 'well interest rates are really low, we will wait and see what happens to unemployment'. So if things go wrong, you could still get a rate cut, but at this stage, I think it's more likely they will sit on their hands for a long time," he said.

"We don't really expect a rate rise until the very back-end of next year."