Roy Morgan Research’s latest Business Confidence survey in August 2014 declined marginally by three points (2.5%) from July (to 116.1), following the strong performance in July when it rose by 11 points (10.2%). Business confidence is now 20.2 points (14.8%) below the peak of 136.3 in October 2013 following the new government and is now below the average of the last four years (118.1). It is also below the pre-election result of 119.6 in August 2013. These August figures are the results of 1027 interviews with all types of businesses across Australia.
The main reason for the decline in confidence in August was the decrease in the proportion of businesses feeling that economic conditions in Australia would improve over the next year and five years. There was also a decline in the proportion feeling that they would be better off financially in 12 months’ time.
Despite a decline in confidence, the proportion thinking that the next 12 months would be a good time to invest in growing their business remained unchanged at 57%, the equal highest since April 2014.
Monthly Business Confidence - Australia
Source: Business Confidence, Roy Morgan Business Single Source (Australia), December 2010 – August 2014, average monthly sample, n = 2072
In the August quarter, “finance and insurance” (134.9) was the most confident sector followed by “rental, hiring and real estate services” (132.6) and “wholesale trade” (132.3). The high-profile sectors in which hopes for economic recovery have been focused remain below the average confidence level and are showing no improvement, with “retail” on 101.5, “construction” on 109.9 and “manufacturing” on 102.3.
Confidence levels vary by state with Tasmania narrowly the highest, followed by Queensland, South Australia, Western Australia, New South Wales and Victoria.
Norman Morris, Industry Communications Director, Roy Morgan Research, says:
“The decrease in business confidence in August was expected given the continued uncertainty surrounding the Budget issues, the declining outlook for the mining industry and mixed messages about global recovery and political instability.
“Confidence in the key areas of retail, construction and manufacturing, which were seen as making up for a slowdown in the mining industry all remain below average in confidence in August, although the latest retail figures are likely to provide some encouragement.
“The full impact of the Budget is yet to be seen with problems getting it passed by the Senate and compromises which are likely to reduce confidence in the government. Continued instability and uncertainty is not a good environment to make business decisions.
“When businesses do become more inclined to borrow, banks will need to improve their customer dealings as measured by Roy Morgan Business Bank Satisfaction, which shows that they are currently well below the satisfaction level of the banks’ personal customers. It is obvious from this that banks and business will need to work more closely with each other if they are to achieve a positive outcome for all parties and the economy.”
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