Tuesday, August 30th, 2011 - Roy Morgan Research

In the first survey of Business Confidence following the dramatic slide in the ASX in early August, confidence improved marginally to 102.1 from 99.8 in July. This improvement was not uniform across all industries and was due to the feeling that things will improve over the next one to five years.

These are the latest findings from the Roy Morgan Research Monthly Business Confidence Survey conducted between the 3rd and 18th of August.

The Roy Morgan Business Confidence Survey commenced in December 2010 at a time when the share market had been improving and some optimism was coming back into the market. The Business Confidence Survey reflects this opinion with a level of 131.5 in December 2010 and stayed around this point to April 2011 (128.2). With the dramatic drop in the ASX in early August it was decided to conduct an additional survey to measure the impact that this may have had on business confidence.

The chart below shows that the result for August was up marginally to 102.1 from 99.8 in July.

Chart 1: Roy Morgan Business Confidence Rating

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Source: Roy Morgan Business Survey, Dec 10 – Aug 11, average monthly sample Dec10 – Jul11 n=1158.
*August Interviews Conducted 3rd Aug – 18th Aug n=1537.

The reason for this perhaps surprising result is that businesses showed some increased optimism about how economic conditions would be likely to improve over the following one to five years from the current low position. (Refer Survey Summary).

Norman Morris, Industry Communications Director, Roy Morgan Research, says:

“The apparent stability in Business Confidence masks the fact that we definitely have a two speed economy. There has been a dramatic fall in confidence in July and August amongst Manufacturers, Agriculture, Retail and Construction to a level that now puts them below the business average and well below the confidence levels shown for other industries including mining.

“Although businesses are generally feeling worse off than they were last year, there are encouraging signs that they think conditions will improve for the economy generally over the next five years. On the other hand they are still quite negative compared to early in the year about their own business’s prospects for the coming 12 months, with 49% thinking it is a bad time to invest and only 32% thinking that their business will be better off next year.”

Chart 2 show the Manufacturing sector has been particularly hard hit by recent events having fallen to the lowest level of confidence among the major industry sectors (81.1), followed by Construction (83.9), Agriculture (84.8) and Retail (89.4).


Chart 2: Roy Morgan Business Confidence Rating – by Industry

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Source: Roy Morgan Business Survey, Dec 10 – Aug 11, average monthly sample Dec10 – July11 n=1158.
*August Interviews Conducted 3rd Aug – 18th Aug n=1537.

This monthly Roy Morgan Business Confidence rating is based on approximately 1100 interviews per month, with the August survey being conducted from the 3rd to 18th of August with 1537 businesses.

Survey Summary: Results for monthly Roy Morgan Business Confidence Rating for the component questions are as follows

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Source: Roy Morgan Business Survey, Dec 10 – Aug 11. *August Interviews Conducted 3rd Aug – 18th Aug n=1537.

Business Satisfaction – Business Banking Report in Australia is available for download.

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Keywords

Business Confidence, Share market crash, share market slide, Retail, Manufacturing, Construction and Agriculture,

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