Monday, March 26th, 2012 - Roy Morgan Research
Confidence among businesses in Australia increased for six consecutive months to January 2012 when it reached 118.7, but has pulled back a little to 116.6 in February 2012. This indicates that despite considerable economic uncertainty, the majority of businesses still remain positive in their outlook.
These are the latest findings from the Roy Morgan Monthly Business Confidence Survey conducted amongst a sample of 2199 businesses across Australia in February 2012.

The Roy Morgan Business Confidence Rating stood at 128.2 in April 2011, immediately prior to the decline in the ASX. The confidence rating continued to slide down to 99.8 in July before climbing to its current level of 116.6.

Roy Morgan Business Confidence Rating

Source: Roy Morgan Business Survey, Dec 10 – Feb 12, average monthly sample Dec10 – Feb 12, n=1,605.

The major reason for the lift in confidence from July through to January 2012 has been a big increase in the proportion of businesses considering that “Australia will have good economic conditions in the next 12 months” which rose from 43% in July 2011 to 61% in January, before declining a little to 59% in February 2012.

This positive economic outlook is impacting favourably on investment decisions by businesses with 56% now considering the next 12 months as a “good time to invest in growing the business”, up from 55% in January 2012 and 49% in July 2011.

Norman Morris, Industry Communications Director, Roy Morgan Research, says:
“Although business confidence for all states and industries remains positive overall, major differences remain between them. Australian businesses are not seeing their outlook as the much quoted ‘two-speed economy’ but rather are ‘multi-speed’ in their confidence.

“As would be expected, Western Australian businesses remain the most positive, followed by Victoria, NSW and Qld, with Tasmania and South Australia below average but still positive. The most positive industry outlook comes from Mining and Finance, but Health Care and Social Assistance are close behind them. Retail and Construction have the least positive outlook but even those two groups on balance are positive.

“In addition to location and industry, it also appears that business size is a major determinant of confidence with the medium and large businesses being the more confident and the micro businesses, with a turnover of less than a million dollars per year, being the least confident. As micro businesses account for around 90% of businesses in Australia, any assistance such as tax relief or drop in interest rates would have a major overall impact on business sentiment.”

The latest detailed Roy Morgan Business Confidence – Monthly Detailed Report in Australia is now available.

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Vaishali Nagaratnam
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business confidence, economic outlook, Australian economy



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