Friday, July 6th, 2012 - Roy Morgan Research
Business Confidence in Australia in June 2012 remained relatively steady on 105.4, down only marginally from 105.8 in May which gives some hope that it is bottoming out but at a level that is only just positive. These are the latest findings from the Roy Morgan Research Business Confidence Survey conducted among a sample of 2,577 businesses across Australia in June 2012.
 
The negative sentiment that is impacting most on business and reflected in the low level of business confidence is that there is still a feeling that economic conditions in Australia over the next 12 months will remain poor. Nearly half (47%) of the businesses surveyed believe that Australia will face “bad times” economically over the next 12 months. This is unchanged from May and is the highest level since Sept 2011. As a consequence of the feeling that the economy will still be facing tough times over the next 12 months, businesses are feeling less inclined to invest in expansion. It is a bad sign for economic recovery in Australia that 51% of businesses think that the next 12 months will be a bad time to invest more in the business; this is around the highest negative sentiment seen over the last 18 months.


Roy Morgan Business Confidence Rating


Source: Roy Morgan Business Survey, Dec10 – June12, Average monthly sample n=1,784.


It is likely that the global economic uncertainty (particularly Europe), combined with issues around the carbon tax, low commodity prices and mining super profits tax are combining to create considerable doubt among businesses in Australia as to their prospects in the coming year. Despite the rather negative economic news over the last 6 months, there are now some tentative signs of improvement recently that gives some hope that business confidence may have bottomed out in June.

Western Australian businesses remain the most positive (120.2) but since January 2012 they have also shown a drop in confidence around the same magnitude as total businesses in Australia. The biggest declines in confidence since January have been seen in Victoria (down 13.2 points) and NSW (down 12.4 points). Tasmania clearly remains the most negative State.

The most positive industries are “education and training” (126.9), “information, media and telecommunications” (125.5) and “finance and insurance” (124.6). In January “mining” was the most confident but it has slipped back to be in sixth place currently. The global economic situation, declining commodity prices and tax changes appear to have put a dent in the confidence of the mining industry. The least confident industries currently are “construction” (95.7) and “transport, postal and warehousing” (97.4).


Norman Morris, Industry Communications Director, Roy Morgan Research, says:
 
“It appears that the reduction in the cash rate by the RBA in May and June this year has been insufficient to increase business confidence and at best it may have stopped it falling further. The ultimate impact of reductions in interest rates on business will  depend on how much of the reduction in official rates is passed on to business and how businesses react to the world economic situation,  the carbon tax and other changes which combined have the potential to maintain a mood of uncertainty and low confidence.”
 

About Roy Morgan Business Single Source Survey:

The Roy Morgan Research Business Survey began in May 2010 and currently conducts more than 2,000 interviews per month to measure Business Confidence. Around 1,100 of these interviews also cover all aspects of Business Finance with the remainder covering Telecommunications.

The latest Business Confidence Reports provide a full analysis by major industry sectors, size of business and location.

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Roy Morgan Research


Roy Morgan Research is Australia’s best known and longest established market research and public opinion survey company. Roy Morgan Single Source is thorough, accurate, and provides comprehensive, directly applicable information about current and future customers. It is unique in that it directs all the questions to each individual from a base survey sample of around 55,000 interviews in Australia and 15,000 interviews in New Zealand annually - the largest Single Source databases in the world. The questions asked relate to lifestyle and attitudes, media consumption habits (including TV, radio, newspapers, magazines, cinema, catalogues, pay TV and the Internet), brand and product usage, purchase intentions, retail visitations, service provider preferences, financial information and recreation and leisure activities. This lead product is supported by a nationally networked, consultancy-orientated market research capability.
Shaun Ellis
P: 03 9224 5332
W: www.roymorgan.com

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