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Business Confidence rises again in March – up 2.4pts to 115.7

Source: Roy Morgan Business Single Source (Australia), December 2010-March 2016. Average monthly sample last 12 months = 1,007.

Roy Morgan Research’s Business Confidence rose 2.4pts in March (up 2.1% to 115.7) and has now risen 5.1 pts over the last two months of February and March. The rise in Business Confidence comes after steady improvement on the Australian share-market in March – the All Ordinaries ended yesterday at 5,081.3 (up 1.8% or 91.7pts from March 1, 2016) after the Index dropped in both January and February to start the year amid global economic concerns.

The to-and-fro between PM Malcolm Turnbull, the Opposition, the media, and Senate cross-benchers about when Turnbull would decide to call this year’s Federal Election finally came to a head in March. The Election is due by September this year, however, Turnbull has recalled Parliament to sit for three weeks in April leading into an early Federal Budget, which Turnbull brought forward by a week, to debate the contentious ABCC legislation and if the Senate fails to pass the legislation Turnbull has committed to calling an early Double Dissolution Election on Saturday July 2.

These figures are the results of 1,030 interviews with a cross section of businesses across Australia. The level of Business Confidence in March is clearly positive for the economy overall and just below the 5yr average (116.6). The weakest indicators are the performance of the business compared to a year ago (+7) and expectations of economic conditions in Australia over the next 12 months (+11).

Monthly Business Confidence -- Australia
Roy Morgan Business Confidence - March 2016 - 115.7
Source: Roy Morgan Business Single Source (Australia), December 2010-March 2016. Average monthly sample last 12 months = 1,007.

The March uptick in Business Confidence in March has been supported by a firming ANZ-Roy Morgan Consumer Confidence which finished February at 111.3 (February 27/28) and has since increased to 114.5 (March 26/27), up 3.2pts (+2.9%). Although both surveys have now stabilised and increased marginally in March, the uncertainty that inevitability accompanies a Federal Election campaign means the indexes are likely to experience increased volatility over the next few months depending upon exactly when the Federal Election is to be held.

The rise in Business Confidence in March was mainly due to increased confidence among businesses about economic conditions in Australia over the next 12 months and the next 5 years. Now 52.7% (up 7ppts) of businesses expect the economic conditions to be better off over the next 12 months while only 41.6% (down 4.6ppts) believe it will be worse off. In addition, there was increased confidence regarding economic conditions over the next 5 years. Now 56.3% (up 3.4ppts) think they will be better than a year ago, while 35.8% (down 2.8ppts) think they are not.

Gary Morgan, Executive Chairman, Roy Morgan Research says:

“The improvement in Business Confidence to 115.7 in March mirrors the uptrend in the ANZ-Roy Morgan Consumer Confidence Rating over the same period – now at 114.5 (up 3.2pts, +2.9% during March) and also the first up month of the year so far for the Australian All Ordinaries following two turbulent months heading in the wrong direction to start 2016.

“The stabilisation of equity markets and gentle improvements in confidence – of both businesses and consumers – perhaps played a part in Turnbull’s decision to bring the deadlock in the Senate to a head in mid-March and challenge the Senate cross-benchers to pass the Government’s reforms during a recalled session of Parliament from mid-April or face a Double Dissolution Election on Saturday July 2, 2016.

“Australia hasn’t faced a Double Dissolution Election since 1987, nearly thirty years ago, and the strategy carries risks for Turnbull – including an extra-long campaigning period of up to 100 days if taken from the point Turnbull pro-rogued Parliament to return early from their recess. The political uncertainty over the next few months as Australians head to the polls also means recent gains in Business Confidence, and Consumer Confidence, may retrace somewhat in the next few months before the result of the Federal Election is known.

“Looking at the States shows March Business Confidence was led higher by increases in New South Wales, Victoria and Western Australia with the other three States largely unchanged. Business Confidence is highest in Tasmania and New South Wales – both clearly above the national average whereas despite increasing for six straight months Western Australia remains the lowest in the nation nearly 10% below the national average.”

For comments or more information please contact:

Gary Morgan
Executive Chairman
Office: +61 (3) 9224 5213
Mobile: 0411 129 094