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Business Confidence jumps 3.3pts in December to 117.4

Source: Roy Morgan Business Single Source, Dec 2010-Dec 2017. Average monthly sample over the last 12 months=951
In Australia Business Confidence rose 3.3pts (+2.9%) to 117.4 in December after the coalition Government won two critical by-elections to retain a governing majority.

Businesses are the most positive heading into a new year since 2013 with a majority of businesses, 57.3% (up 3ppts), saying now is a ‘good time to invest in growing the business’ and 52.2% (up 2.5ppts) of businesses expecting ‘good times’ financially over the next 12 months and 49.8% (up a large 5.8ppts) saying the business will be ‘better off’ financially this time next year.

This month’s large increase in Business Confidence was driven by rises in confidence in industries including Manufacturing, Agriculture, forestry & fishing, Education & training and Information media and telecommunications according to the Roy Morgan Business Single Source survey.

December Business Confidence was slightly higher than that month’s ANZ-Roy Morgan Consumer Confidence (115.6) but the weekly ANZ-Roy Morgan Consumer Confidence, has started the New Year positively increasing to 123.5 for the weekend of January 13/14, 2018.

Monthly Business Confidence -- Australia

Roy Morgan Business Confidence - December 2017 - 117.4

Source: Roy Morgan Business Single Source, Dec 2010-Dec 2017. Average monthly sample over the last 12 months=951

Business Confidence up in December driven by positive sentiment about the economy           

  • Businesses are more confident about the performance of the Australian economy over the next year with 52.2% (up 2.5ppts) now expecting ‘good times’ for the Australian economy while 43.1% (down 1.1ppts) expect ‘bad times’;

  • Longer-term views on the Australian economy also increased in December with 52.2% (up 1.6ppts) expecting ‘good times’ for the Australian economy over the next five years and 40.5% (down 0.5ppts) now expecting ‘bad times’;

  • Business are slightly less confident about their own performance with 41.2% (down 1.2ppts) saying the business is ‘better off’ financially than this time last year compared to 28.0% (down 0.2ppts) that say the business is ‘worse off’;

  • However, now 49.8% (up a large 5.8ppts) say the business will be ‘better off’ financially this time next year compared to 19.7% (down 0.6ppts) expecting the business to be ‘worse off’ this time next year – a net positive movement of 6.4ppts;

  • In addition an increasing majority of businesses, 57.3% (up 3ppts) are also positive the next 12 months will be a ‘good time to invest in growing the business’ – the highest figure for this indicator for two years, much higher than the 34.6% (down 2.3ppts) that say it will be a ‘bad time’.

Michele Levine, CEO Roy Morgan, says the strength in Business & Consumer Confidence heading into 2018 suggest the year ahead will be a good one for a rebalanced Australian economy after renewed strength in mining and the closure of legacy manufacturing plants:

“Business Confidence increased 3.3pts (+2.9%) in December to 117.4, signalling a positive end to 2017 after the Federal Government retained its governing majority with victory in the two key by-elections in Bennelong and New England.

“The second consecutive increase in Business Confidence means the leading indicator is finishing a year at its highest point for four years since December 2013 and matches the strong performance seen in the early weeks of 2018 for the ANZ-Roy Morgan Consumer Confidence Rating – now at 123.5 and its highest since October 2013.

“The strength in Business Confidence in the closing weeks of 2017 was led by a reinvigorated Manufacturing industry – now with the industry’s highest Confidence rating since September 2013, along with solid improvements in Information media & telecommunications companies and the Health care & social assistance industries. In addition, the primary resource industries of Mining and Agriculture, forestry & fishing are also performing well.

“Industries to lag on the overall figure in December included Public administration, safety & security, Arts & recreational services and Personal, repair & other services, all of which had Business Confidence well below the national average for the month.

“Analysing Business Confidence by State reveals Australia’s smaller States performing well in December led by South Australia and Tasmania with both States facing key State Elections in the next few months and both sides of politics hopeful of victory. In comparison Business Confidence was relatively unchanged in the larger States of New South Wales and Victoria.

“Interestingly, the State which just had an election, Queensland, now has the lowest Business Confidence of any State despite the upcoming Gold Coast Commonwealth Games due to be held in April. Businesses looking to take advantage of the Commonwealth Games to reach the millions of Australians who will be watching the sporting spectacle can tap into Roy Morgan’s extensive demographic data with a Commonwealth Games Viewer profile available now on the Roy Morgan Online Store.”

Roy Morgan December Business Confidence results are based on 899 interviews with a cross-section of Australian businesses. Business Confidence is now below the 7yr average (116.2).

For comments or more information please contact:

Michele Levine
Office: +61 (3) 9224 5215
Mobile: 0411 129 093