Thursday, October 4th, 2012 - Roy Morgan Research
Business Confidence in Australia in September 2012 fell to 109.3, down a significant 8.3pts from 117.6 in August 2012, the first fall in Business Confidence since June. The decline in Business Confidence was driven by businesses becoming more worried about their position over the year ahead with only 32% (down 7%) expecting the business to be ‘better off financially’ this time next year – a record low for this indicator.
 
The fall in Business Confidence comes after heavy falls on Australian sharemarkets in early September as concerns mounted that Australia’s ‘Mining Boom’ may be coming to an end. These are the latest findings from the Roy Morgan Research Business Confidence Survey conducted among a representative sample of 2,676 businesses across Australia in September 2012.

The concerns about the sustainability of Australia’s ‘Mining Boom’ mounted in early September after BHP Billiton cancelled $30 billion worth of expansion at its giant Olympic Dam mine in South Australia and the further development of its harbour facilities at Port Hedland in Western Australia. Iron ore miner Fortescue added to the gloom as it sacked 1,000 employees and contractors as the iron ore price plunged below $100 per tonne.


Roy Morgan Business Confidence Rating


Source: Roy Morgan Business Survey, Dec10 – Sep12, Average monthly sample n=1,906.

In addition to declining confidence about the financial condition of the business this time next year there was a significant drop in confidence about economic conditions in Australia over the next 12 months with 58% (down 4%) of businesses saying they expect ‘good times’ financially for Australia and 49% (down 6%) of businesses saying the next 12 months will be a ‘good time to invest in growing the business’ – now fewer than the 51% (up 6%) that say it will be a ‘bad time to invest in growing the business’.

Analysis by State of the three-month Quarterly business confidence figure shows that the impact of the plunging price of iron ore and other commodities can clearly be seen by the drop in business confidence in Australia’s Mining State – Western Australia to 113.7 (down 6.4pts). Although still the highest of all Australian States, this is now only marginally higher than in Victoria (113.2, up 1.6pts) and Tasmania (112.5, up 3.1pts). Despite improving in September, business confidence remains lowest in South Australia (109.4, up 3.4pts).

Looking at industries, the most positive industries are “Public administration” (129.2), “Education and Training” (127.7) and “Information media and Telecommunications” (127.4) and “Finance and insurance” (125.9). “Mining”, the most confident industry in January 2012 has now slipped back to be in sixth place currently following the steep falls in commodity prices and the introduction of the Government’s Minerals Resource Rent Tax on July 1, 2012. The least confident industries currently are “Transport, postal and warehousing” (99.8), “Manufacturing” (100.7), “Agriculture” (101.0) and “Construction” (104.1).


Michele Levine, Chief Executive Officer, Roy Morgan Research, says:
 
“The recovery in business confidence seen mid year has stalled in September with increasing worries about the end of Australia’s ‘Mining Boom’ significantly lowering business confidence – particularly about the next 12 months. This week’s surprise decision by the Reserve Bank of Australia to cut interest rates to 3.25% (down 0.25%) – and a three year low, indicates the worry the RBA holds about Australia’s economy.

“Today’s Roy Morgan Business Confidence for September, showing a significant fall in business confidence to 109.3 (down 8.3pts), vindicates the decision by the RBA to lower interest rates which will encourage businesses to borrow and invest during the next few months into 2013.”


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.

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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

Keywords

business, confidence, economy, expectation, economics,

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