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Business Confidence down again in September to 113.2

Source: Roy Morgan Business Single Source, Dec 2010–Sep 2017. Average monthly sample over the last 12 months=971.
In Australia Business Confidence fell 1.2pts (-1.0%) to 113.2 in September, as discussion continued about the mounting cost of energy heading towards the peak Summer season.

Despite these worries, businesses remain positive with a majority of businesses, 54.5%, saying now is a ‘good time to invest in growing the business’ and 48.5% of businesses expecting to be ‘better off’ financially this time next year compared to only 20.1% that expect to be ‘worse off’.

The fall in Business Confidence was driven by falls in confidence in several industries including Transport, postal & warehousing, Information, Media & Telecommunications, Finance & Insurance and Accommodation & Food services according to the Roy Morgan Business Single Source survey.

Although moving in the opposite direction Business Confidence is now level with weekly ANZ-Roy Morgan Consumer Confidence, up 1.2pts (1.1%) to a monthly figure of 113.2 in September.

Monthly Business Confidence -- Australia

Roy Morgan Business Confidence - September 2017 - 113.2Source: Roy Morgan Business Single Source, Dec 2010–Sep 2017. Average monthly sample over the last 12 months=971.

Business Confidence down slightly in September as more businesses say they are worse off financially than last year but more positive about Australia’s economy in the short-term

  • Business Confidence decreased in September on the back of declining views about the performance of the business with 39.9% (down 1.6ppts) saying business is ‘better off’ financially than this time last year and 36.2% (up 3.9ppts) saying business is ‘worse off’;

  • In addition, looking forward, 48.5% (down 3.2ppts) expect the business to be ‘better off’ financially this time next year compared to 20.1% (up 1.9ppts) that expect the business to be ‘worse off’;

  • However, businesses have grown more positive about the performance of the Australian economy over the next year with 51% (up 6.6ppts) now expecting ‘good times’ for the Australian economy while 43.2% (down 3.9ppts) now expect ‘bad times’;

  • Despite a positive short-term view, longer-term views on the Australian economy have turned down in September with 48.7% (down 2.6ppts) expecting ‘good times’ for the Australian economy over the next five years and 40.8% (up 2.6ppts) expecting ‘bad times’;

  • A virtually unchanged majority of businesses, 54.5% (down 0.4ppts) are also positive that the next 12 months represent a ‘good time to invest in growing the business’ far higher than the 36.5% (up 0.7ppts) that say it will be a ‘bad time to invest’.

Michele Levine, CEO Roy Morgan Research, says despite consecutive falls Business Confidence is broadly positive and now level with a moderately firming Consumer Confidence:

“Business Confidence fell 1.2pts (-1.0%) in September to 113.2, and is now level with Consumer Confidence which was up 1.2pts (+1.1%) to 113.2 in September. Both are down slightly on their levels of a year ago in September 2016.

“Moderate declines in Business Confidence in Australia’s two largest States of New South Wales and Victoria along with larger falls in South Australia and Tasmania drove Business Confidence down in September.

“South Australia’s Business Confidence has dipped substantially over the past two months as the State’s high electricity prices have gained media attention. Heading towards a March 2018 State Election the price of energy, and potentially a repeat of last Summer’s blackouts, will be key issues for the SA electorate.

“Today’s announcement that Nick Xenophon, leader of the Nick Xenophon Team (NXT) in Federal Parliament, is resigning his position as a Senator and returning to State politics to contest next year’s State Election as the leader of the ‘SA Best’ party adds a new dimension to the issue.

“However, there was positive news on a State level with the mining States of Western Australia and Queensland ‘bucking’ the national trend with improved Business Confidence in September as mining export prices remained strong. This is the first time this year Western Australia doesn’t have mainland Australia’s lowest Business Confidence.

“Analysing Business Confidence by industry shows lagging industries include Electricity, Gas, Water & Waste, Accommodation & Food services, Transport, postal & warehousing, Finance & Insurance and Arts & Recreational services.

“Industries performing well in September once again include Mining, Health care & social assistance and Agriculture, forestry & fishing, while there were clear improvements in sentiment for the industries of Construction and Education & training.”

Roy Morgan August Business Confidence results are based on 869 interviews with a cross-section of Australian businesses. Business Confidence is now below the 7yr average (116.3).

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