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Australian Business Confidence falls further in June to its lowest level in two years

Source: Business Confidence, Roy Morgan Business Single Source (Australia), December 2010 – June 2014, average monthly sample, n = 2,122
Roy Morgan Research’s latest Business Confidence survey in June 2014 fell a further 6.2 points (5.4%) from May (to 108.1), continuing the negative impact of the Budget reflected in the May result and in line with the drop in consumer confidence since the Budget. Business confidence is now 28.2 points (20.7%) below the peak of 136.3 in October 2013 following the new government and the lowest level recorded since June 2012 when it was 105.4. These June figures are the results of 1,240 interviews with all types of businesses across Australia.

The main reason for loss of confidence in June was the decline in the proportion of businesses feeling that economic conditions in Australia would improve over the next five years. This is now at its lowest level since August 2011.

As a result of this decline in outlook for the economy, there was a drop to 52% (from 54%) in the proportion thinking that the next 12 months would be a good time to invest in growing their business, the lowest level since June 2013.

Monthly Business Confidence - Australia

business-confidence-june

Source: Business Confidence, Roy Morgan Business Single Source (Australia), December 2010 – June 2014, average monthly sample, n = 2,122

In the June quarter, finance and insurance (137.4) was the most confident sector following a decline in mining (to 136.2). 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 105.3, construction at 110.5 and manufacturing at 106.6.

All states now have very similar levels of confidence, with Western Australia narrowly the highest, followed by Tasmania, Victoria, South Australia, NSW and Queensland. In the June quarter, all states showed some decline.

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

“The decline in business confidence in June was expected given the generally negative reaction as shown in the drop in consumer confidence following the Budget. Both business and consumers are obviously far from convinced that the economy will improve in the short- to medium-term, with both measures of confidence only marginally in a positive range with the June average for consumers on 103.3 and business very similar on 108.1.

“The hoped-for improvement in confidence in the key areas of retail, construction and manufacturing, which were seen as making up for a slowdown in the mining industry, did not happen during June, and these sectors all remain below average in confidence.

The full impact of the Budget will ultimately depend on the extent to which the Federal Government is able to get it passed by the Senate and how long this process is dragged out, creating instability and uncertainty, which is not a good environment to make business decisions.

“In the meantime, the low level of confidence in the economy picking up over the next five years is subduing the appetite for business expansion and borrowing which is not good for economic growth and recovery. Not only are businesses becoming less inclined to borrow but they are also having issues dealing with banks, with the Roy Morgan Business Bank Satisfaction showing that they are 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.”

For comments or more information please contact:

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

Related research findings

Click here to purchase the Business Confidence – Monthly Detailed Report in Australia.

Click here to purchase the Business Banking Satisfaction Monthly Report in Australia.

Click here to purchase the Consumer Confidence – Monthly Detailed Report in Australia.

Click here to purchase the Consumer Banking Satisfaction Monthly Report in Australia.

Results for the Asia-Pacific ANZ-Roy Morgan Consumer Confidence Rating* are as follows:

AUSTRALIA CHINA NEW ZEALAND INDONESIA
2014 MAY JUNE JULY 5/6 MAY JUNE MAY JUNE MAY JUNE
Interviews 4,313 4,253 1,000 1,000 1,047 978 2,024
Q1 Would you say you and your family are better off financially or worse off than you were at this time last year?
Over the past year Better off 27 27 57 52 35 38 47
Worse off 28 31 6 5 25 25 11
Question 1 difference -1 -4 51 47 10 13 36
Q2 This time next year, do you and your family expect to be better off financially or worse off than you are now?
Better off 34 33 58 53 49 49 74
Worse off 24 25 4 7 14 15 3
Question 2 difference 10 8 54 46 35 34 71
Q3 Thinking of economic conditions in <COUNTRY> as a whole. In the next 12 months, do you expect we’ll have good times financially, bad times or some good and some bad?
Good Times 22 24 67 64 48 49 85
Bad Times 42 39 8 9 21 16 14
Question 3 difference -20 -15 59 55 27 33 71
Q4 Looking ahead, what would you say it is more likely, that in <COUNTRY> as a whole, we’ll have continuous good times during the next five years or so – or we’ll have bad times – or some good and some bad?
Good times 28 28 70 64 48 49 91
Bad times 28 27 10 12 18 12 8
Question 4 difference 0 1 60 52 30 37 83
Q5 Generally, do you think now is a good time – or a bad time – for people to buy major household items?
Good time to buy 45 46 42 39 57 61 62
Bad time to buy 22 20 4 5 21 19 35
Question 5 difference 23 26 38 34 36 42 27
ANZ-Roy Morgan Consumer Confidence Rating 102.4 103.3 152.5 147 127.6 131.9 157.6

*The ANZ-Roy Morgan Consumer Confidence Rating is 100.0 plus the simple unweighted average of the difference between the percentage of respondents who give a favourable and those who give unfavourable answers to the five key questions.

About Roy Morgan Research

Roy Morgan Research is the largest independent Australian research company, with offices in each state of Australia, as well as in New Zealand, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan Research has over 70 years’ experience in collecting objective, independent information on consumers.

In Australia, Roy Morgan Research is considered to be the authoritative source of information on financial behaviour, readership, voting intentions and consumer confidence. Roy Morgan Research is a specialist in recontact customised surveys which provide invaluable and effective qualitative and quantitative information regarding customers and target markets.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2