Business Confidence in Australia in December 2012 fell to 114.8, down 2.0 points from 116.8 in November 2012. This decrease in confidence follows the improvement seen in November and is a result of more businesses considering that economic conditions in Australia will not improve over the next 12 months or the next five years. These are the latest findings from the Roy Morgan Research ‘Business Confidence’ survey of over 3,000 businesses in December 2012.
As would be expected, confidence among businesses in the Mining sector fell further in December to 124.6, down from its peak of 176.3, 18 months ago. Although the mining industry still has above average confidence, its decline is of concern given that other major industries including Construction, Agriculture, Manufacturing and Retail all have below average confidence and as such do not look like replacing the decline in Mining.
Roy Morgan Business Confidence Rating
Source: Roy Morgan Business Survey (Australia), December 2010 – December 2012 (average monthly sample size n = 2,028).
Although Business Confidence is showing some weakness, the majority still consider that Australia will have better economic times over the next 12 months, (61%) and that the next 12 months will be a good time to invest in the business (53%). The problem is that both of these measures have shown a decline in December.
Norman Morris, Industry Communications Director, Roy Morgan Research, says:
“The small decline seen in Business Confidence in December is the net result of a number of positive and negative factors impacting on the business psyche.
“On the negative side, during December there was a great deal of coverage of the USA approaching the ‘fiscal cliff’, the Australian Government abandoning the objective of a budget surplus and the Australian dollar being regarded by many as being too high for exports to compete.
“These negative factors were largely offset by positive news such as an interest rate cut, the ASX increasing by 3.2% for the month, iron ore prices rebounding, some optimism regarding the European economic problems and improving growth prospect in China.
“This rather complex interaction of factors on business is likely to result in continued volatility in Business Confidence for some time until a clearer and more stable pattern emerges.
“The Roy Morgan Research Business Confidence Survey in December was based on over 3,000 interviews with businesses, making it much larger than the other major published surveys of around 500 to 600 interviews and this enables much more reliable analysis such as by state, industry and size.”