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Business Confidence lower in July – down 2.8% to 116.1 during month of political uncertainty

Source: Roy Morgan Business Single Source (Australia), December 2010-July 2016. Average monthly sample last 12 months = 1,018.

Roy Morgan Research’s Business Confidence fell 2.8% to 116.1 in July following the inconclusive Australian Federal Election at the start of July. The fall in Business Confidence comes despite an upward trend on the Australian share-market in July – the All Ordinaries closed the end of July at 5,644 (up 6.3% (or 334pts) from June 30, 2016, 5310). This was the highest close for exactly a year since July 31, 2015 (5,681).

The fall in Business Confidence in July means Business Confidence has dipped just below the 6yr average of 116.7.

Net expectations of business performance over the next 12 months have fallen to 22.4pts (down 6.3pts in July) and net views of whether the next 12 months will be a ‘good/bad time to invest’ are now 16.5pts (down 6.6pts in July). Roy Morgan Business Confidence results are based on 982 interviews with a cross section of businesses across Australia.

Monthly Business Confidence -- Australia

Roy MOrgan Business Confidence - July 2016 - 116.1

Source: Roy Morgan Business Single Source (Australia), December 2010-July 2016. Average monthly sample last 12 months = 1,018.

The fall in Business Confidence in July was mainly due to decreased confidence about the year ahead. Now 41.4% (down 2ppts) of businesses say they expect business to be better off financially than they are now while 19% (up 4.3ppts) believe they will be worse off. In addition 54.3% (down 2.9ppts) say the next 12 months is a ‘good time’ to invest in growing the business while 37.8% (up 3.7ppts) say it is a ‘bad time’. Regarding whether Australia will have continuous ‘good times’ or ‘bad times’ over the next five years 55.2% (down 3.7%) said Australia will have ‘good times’ and 35.9% (up 4.1%) said Australia will have ‘bad times’.

While Business Confidence fell in July, ANZ-Roy Morgan Consumer Confidence has been fairly strong over the past month and is now at 118.0 (July 30/31, 2016), up 2.2pts from just under a month ago on the weekend of the Federal Election, July 2/3, 2016 (115.8).

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

“Business Confidence fell slightly in July to 116.1 – down 3.4pts (down 2.8%) – after the Federal Election delivered a very close result with the L-NP winning a bare majority of only one seat in the House of Representatives. Although the result in the House of Representatives was disappointing, the result in the Senate is probably better for Prime Minister Malcolm Turnbull’s leadership.

“The new Senate has an expanded cross-bench of 11 Senators (up from eight pre-election) including four Senators from Pauline Hanson’s One Nation from Queensland, New South Wales & Western Australia and three from the Nick Xenophon Team (NXT) – all from South Australia. In addition, Bob Day (Family First), David Leyonhjelm (Liberal Democrats) and Jacqui Lambie (Tasmania) and broadcaster Derryn Hinch (Victoria) were elected.

“Although the increase in the cross-bench at first appears challenging for the Turnbull Government, in fact most of the new Senators are right-of-centre and likely to be favourable to the Government’s broader Budget and policy agenda.

“Two of the most important policies the Government took to the election were significant corporate tax cuts and the re-introduction of the Australian Building and Construction Commission (ABCC) to improve workplace productivity in the Construction industry. Despite the challenges, the Government should be able to pass these important reforms which will stimulate an Australian economy still dealing with the end of the mining boom.

 “Looking at the States shows Business Confidence in July fell significantly in Tasmania and Victoria, and was also clearly down in New South Wales, Queensland and Western Australia where Business Confidence is once again the lowest in the nation for the third straight month just above the neutral level of 100. Bucking the trend in the other five States was South Australia which saw a strong increase in Business Confidence in July no doubt assisted by the Government’s pledge to spend $50 billion in the State building Australia’s new fleet of submarines.”

For comments or more information please contact:

Norman Morris

Industry Communications Director

Office: +61 (3) 9224 5172

Mobile: 0402 014 474