Friday, September 23rd, 2011

In the first full month of surveying following the dramatic slide in the ASX in early August, Roy Morgan Business Confidence steadied at 101.8, up marginally on the 99.8 recorded in July. This improvement was mainly as a result of the improved outlook for the economy over the next 12 months.

These are the latest findings from the Roy Morgan Monthly Business Confidence Survey conducted amongst a sample of 2,750 businesses across Australia in August 2011.

The Roy Morgan Business Confidence Rating stood at 128.2 in April 2011, immediately prior to the decline in the ASX. The confidence rating continued to slide down to 99.8 in July before showing marginal signs of recovery to 101.8 in August.

Chart 1: Roy Morgan Business Confidence Rating

Source: Roy Morgan Business Survey, Dec 10 – Aug 11, average monthly sample Dec10 – Aug11 n=1,335.

The major reason for the decline in confidence between April 2011 and August 2011 has been the dramatic drop in the outlook for the Australian economy over the next 12 months with the majority of businesses (53%) now considering that “Australia will have bad economic conditions in the next 12 months”. This compares to only 36% who had this view in April 2011.

Chart 2 shows that although businesses got a little more positive in August 2011 regarding economic conditions over the next 12 months, there is a big gap to make up to reach the positive level seen earlier in the year.

Chart 2: Outlook for the Australian Economy Next 12 months

Source: Roy Morgan Business Survey, Dec 10 – Aug 11, average monthly sample Dec10 – Aug11 n=1,335.

This negative economic outlook is impacting on investment decisions by businesses with only 50% now considering the next 12 months as a good time to invest in growing the business. In January 2011, 70% thought it a good time to invest. This dramatic drop is clearly not a good outcome for economic growth in Australia over the next 12 months.

Norman Morris, Industry Communications Director, Roy Morgan Research, says:

“Although there has been a drop in confidence amongst most types of businesses over the last few months, the current level of confidence is by no means uniform across all sectors. The most pessimistic are the “micro” businesses (turnover under $1million), those located in Queensland, Tasmania and South Australia, and those involved in “Retail”, “Manufacturing” and “Agriculture”.

“On the other hand the areas of greatest optimism are Medium/Larger businesses, those located in Victoria and Western Australia, and those involved in “Finance and Insurance”, “Health Care”, and “Mining”.

“It is obvious from our analysis that Australian Business Confidence clearly reflects a multi speed economy and that any attempt to provide stimulus to industry will need to take business size, location and industry into account.”

Survey Summary: Results for monthly Roy Morgan Business Confidence Rating for the component questions

Source: Roy Morgan Business Survey, Dec 10 – Aug 11.

Find out more about the Roy Morgan Business Confidence – Monthly Detailed Report in Australia.

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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


Business Confidence Steadies With Some Improvement In Optimism For The Economy Over the Next 12 Months, But Investment Intentions Lag



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