Back To Listing

Business confidence slumps in December to lowest level in three years

Source: Roy Morgan Business Single Source (Australia), December 2010 – December 2014. Approximate average monthly sample last 12 months, n = 1,186

Roy Morgan Research’s Business Confidence survey in December 2014 declined by 17.7 points (down 14.4%) from November (to 105.3), the lowest level since August 2011 and well below the four-year average of 118.0. Business confidence has shown considerable volatility over the last 12 months and is currently 31 points (22.7%) below the peak of 136.3 in October 2013 following the election of the new government. These December figures are the result of 756 interviews with all types of businesses across Australia.

The decrease in business confidence was across all components of the index but was focused mainly on a more pessimistic outlook for the Australian economy over the next 12 months and five years, resulting in the belief that this would not be a good time to invest in growing the business. Only 52% of businesses now think the next 12 months will be a good time to invest in growing their business, well down on the 62% recorded in November and below the four-year average of 56%.

Monthly Business Confidence - Australia

 Business confidence plummets in December
Source: Roy Morgan Business Single Source (Australia), December 2010 – December 2014. Approximate average monthly sample last 12 months, n = 1,186

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

“The decline in business confidence in December was largely a result of the continual negative publicity regarding the Australian and world economies that occurred during the month in the lead up to the “Mid-Year Economic and Fiscal Outlook” (MYEFO) report from the Australian Government. When the report was released in the middle of December it confirmed that the Australian budget was now on track to a much larger deficit than was previously presented, as a result of the collapse of iron ore prices, weaker tax receipts and senate delays in passing legislation for expenditure cuts.

“While it was hoped that confidence in the retail, construction and manufacturing industries would make up for a slowdown in mining investment and iron ore prices, these key areas are showing no real signs of an improvement in outlook and are unlikely to cover the impact of the mining downturn. Manufacturing remains well below average in confidence with 94.3, construction is close to average with 103.7 and retail is below average on 97.1.

“Business confidence is highest in Tasmania, WA, Qld and Vic and below average in NSW and SA.

“Unemployment remains a major problem with the Roy Morgan unemployment level in December reaching 10.9%, which was up from 10.0% in November.

“Business confidence has not been helped by the fact that consumers are lacking confidence. The ANZ Roy Morgan Consumer Confidence Index shows that this started December on 113.9 and began January on 111.7, having hovered around these relatively low levels during the month.

“With businesses now being less likely to borrow over the next 12 months, it remains a challenge for banks to improve their satisfaction levels among businesses if they are to retain them and attract new business. Our research shows that banks have been raising the satisfaction levels of their personal customers and leaving their business customers well behind.”

For comments or more information please contact:
Suela Qemal, General Manager - Financial Services & Consulting
Office: +61 (3) 9629 6888