Roy Morgan Research’s latest Business Confidence survey in February 2014 fell to 117.3, down from 131.5 in January, and back to below the level in August (119.6) 2013 in the month prior to the federal election. This negative result was across all business sizes as well as most states and industries. These February figures are the results of 1,343 interviews with all types of businesses across Australia.
The fall in confidence among business in February was caused by a decrease in positive feelings about where the economy is heading in the next 12 months and the next five years. This has resulted in a decrease in business intentions to invest in expansion over the next year.
February’s decrease in Business Confidence was greatest among micro business, down 14.9 points to 115.2, small business down 9.0 points to 131.0, but medium/large business were fairly steady (down 4.3 points to 143.9). Medium/large businesses (turnover $5m+ p.a.) have clearly been the most confident over the last three years and in February, they remain well above their three-year average.
Monthly Business Confidence – Australia
Source: Business Confidence, Roy Morgan Business Single Source, average monthly sample n = 2,200.
All states except Tasmania have shown a decline in business confidence during February, with the biggest drop being in Vic, which fell to 115.8 (down from 134.3 in January). The other negative movers were Queensland (down 15.3 points to 118.6), New South Wales (down 14.3 points to 118.2) and South Australia (down 9.1 points to 124.4).
Over the last quarter, mining has remained the most confident sector (165.3), with the other industries well below, such as construction (135.1), manufacturing (120.6), retail (118.3) and agriculture (106.6). In the last month all of these industries have shown further declines.
Norman Morris, Industry Communications Director, Roy Morgan Research, says:
“The decline in business confidence in February was anticipated given the number of very negative high profile stories during the month. These included the Federal Government decision not to support SPC, the plans by Qantas to reduce their workforce by 5,000, Toyota announcing that it was ceasing car manufacturing in Australia and the very big impact this will have on the parts suppliers as it was the last car manufacturer, Alcoa announcing that it was closing several smelters and the Telstra decision to cut employment in its directories division.
“With nearly 90% of businesses in Australia being classified as micro (annual turnover below $1m), it is of major concern that they have shown the biggest drop in confidence in February and as a result are now clearly the least confident business sector. This has major implications for employment levels in the near to medium future.
“The lead up to the May budget will be a critical time for business confidence as to date the government has been priming business and consumers for a really tough budget and if negative stories continue until (and after) the budget is delivered, confidence could easily fall further in the next few months.”
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