Tuesday, May 1st, 2012 - Roy Morgan Research
Confidence among businesses in Australia increased for six consecutive months to January 2012 when it reached 118.7, but has now experienced its second month of decline and currently sits at 108.9 in March 2012. This indicates that ongoing economic uncertainty continues to cause concern for Australian businesses.
 
These are the latest findings from the Roy Morgan Monthly Business Confidence Survey conducted amongst a sample of 2,319 businesses across Australia in March 2012.

The Roy Morgan Business Confidence Rating stood at 128.2 in April 2011, immediately prior to the decline in the ASX, which led to the fall in confidence to 99.8 in July. Confidence gradually increased up until January 2012, but has since dropped nearly 10 points to 108.9 in March 2012.


Roy Morgan Business Confidence Rating


Source: Roy Morgan Business Survey, Dec 10 – Mar 12, average monthly sample Dec10 – Mar 12, n=1,649.


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 to 57% in March 2012.

This reduced economic outlook is impacting negatively on investment decisions by businesses with 51% now considering the next 12 months as a “bad time to invest in growing the business”, up from 44% in February 2012.


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

“Western Australia continues to have the strongest business confidence of any state, followed by Victoria, NSW, Qld, South Australia and Tasmania. After a drop in confidence from the Mining sector, the Health Care and Social Assistance sector now has the most positive industry outlook. Construction has the least favourable outlook, although it still remains positive in its rating.

“As well as location and industry, business size also seems to be a major contributor to 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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Shaun Ellis
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Keywords

business confidence, economic outlook, Australian economy

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