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Business Confidence down 4.6% in February to 111.4; driven by less confidence in the Australian economy

Source: Roy Morgan Business Single Source (Australia), December 2010-February 2017. Average monthly sample last 12 months = 998.

Roy Morgan Research’s Business Confidence fell 4.6% to 111.4 in February driven by decreasing confidence about the Australian economy. The fall in Business Confidence occurred despite the Australian All Ordinaries gaining slightly in February, up 86pts (+1.5%) to 5,761 while US Indices are at record highs following Donald Trump’s victory in the US Presidential Election.

In Western Australia, facing a State Election this week, Business Confidence remains weak and is the lowest in Australia. The low WA Business Confidence is a key issue for incumbent Premier Colin Barnett trying to hold onto power for a third term following the end of the mining boom which heavily boosted the Western Australian economy over the past decade.

This month’s fall in Business Confidence means Business Confidence is now clearly below the 6yr average (116.5). Roy Morgan February Business Confidence results are based on 958 interviews with a cross-section of Australian businesses.

Driving the decrease in Business Confidence was less confidence about the Australian economy. Now fewer businesses 45.7% (down 6ppts) expect ‘good times’ for the Australian economy over the next 12 months while an increasing number, 46.9% (up 6.7ppts), expect ‘bad times’ – a net negative of 1.2% (down 12.7ppts). Also 49.2% (down 5.3ppts) expect ‘good times’ for the economy over the next five years compared to 41.8% (up 7.3ppts) that expect bad times.

Monthly Business Confidence -- Australia

Roy Morgan Business Confidence - February 2017 - 111.4
Source: Roy Morgan Business Single Source (Australia), December 2010-February 2017. Average monthly sample last 12 months = 998.

However, despite a negative viewpoint on the Australian economy, businesses were slightly more positive on their own prospects – now 46.0% (up 2.7ppts) of businesses expect to be ‘better off’ this time next year cf. 17.2% (up 1.3ppts) that expect to be ‘worse off’ while 53.3% (up 0.4ppts) say the next 12 months are a ‘good time to invest’ cf. 40.2% (up 2.3ppts) that say the next 12 months are a ‘bad time to invest’.

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

“Business Confidence was down 5.4pts (-4.6%) in February – following seasonal trends which show Business Confidence generally decreases in February following a ‘New Year’ boost in January – Business Confidence in February has fallen in five out of the seven years during which this survey has been conducted.

“The decrease in Business Confidence was driven by decreasing confidence about business conditions in Australia over the next 12 months and next five years and despite a positive month for Australian share-markets – the All Ordinaries rose 1.5% in February to 5,761.

“The biggest drivers of the fall were indicators looking at the expected performance of the Australian economy with 45.7% (down 6ppts) of businesses now expecting ‘good times’ for the Australian economy over the next 12 months – the lowest figure for this indicator for a year and a record low 49.2% (down 5.3ppts) expecting ‘good times’ for the economy over the next five years. This is the first time since this survey began less than half the respondents expected ‘good times’ for the Australian economy over the long-term.

“Analysing the movement of Business Confidence across the States in February shows falls in Victoria, Queensland, Tasmania and Western Australia which once again has the lowest Business Confidence of any State. The low Business Confidence in Western Australia presents a huge problem for Premier Colin Barnett facing re-election this week. These falls more than offset increases in South Australia and New South Wales – now with clearly the highest Business Confidence of the larger States. The rebound in NSW follows a dip in January when popular Premier Mike Baird unexpectedly resigned.

“Analysing Business Confidence by industry shows Administration and support services is Australia’s most confident industry closely followed by Education and training, Agriculture, forestry and fishing and a resurgent Wholesale trade – now at its highest since mid-2016.

“In contrast, four industries are well below the national average with Retail trade suffering its traditional post-Christmas sales period hangover – Retail Business Confidence has fallen in six out of the last seven years in February. Only slightly higher is Electricity, gas, water and waste – which has had several high profile problems related to reliability of supply particularly in South Australia and New South Wales, and then Personal, repair and other services and Manufacturing – which faces a challenging second half of 2017 as Australia’s automotive manufacturers get set to close down in October.”


For comments or more information please contact:

Norman Morris
Industry Communications Director
Office: +61 (3) 9224 5172
Mobile: 0402 014 474
Norman.Morris@roymorgan.com