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Business Confidence up slightly in November to 116.7 (up 0.4%); highest since Federal Election

Source: Roy Morgan Business Single Source (Australia), December 2010-October 2016. Average monthly sample last 12 months = 1,023.

Roy Morgan Research’s Business Confidence rose 0.4% to 116.7 in November. The small rise in Business Confidence occurred as the Australian All Ordinaries rose during November – the All Ordinaries ended November at 5,502.4 (up 100.0pts from October 31, 2016).

This month’s small rise in Business Confidence means Business Confidence is now just above the 6yr average (116.6) and above the current ANZ-Roy Morgan Consumer Confidence rating of 115.4.

Businesses are increasingly confident about their prospects over the year ahead with net expectations of business performance over the next 12 months up 10.3ppts to 30.3pts in November with net views of whether the next 12 months will be a ‘good/bad time to invest’ now 20.5pts (up 2.3ppts). Roy Morgan November Business Confidence results are based on 950 interviews with a cross section of businesses across Australia.

Monthly Business Confidence -- Australia

Roy Morgan Business Confidence - November 2016 - 116.7

Source: Roy Morgan Business Single Source (Australia), December 2010-November 2016. Average monthly sample last 12 months = 1,023.

However, although businesses’ confidence about their own prospects increased in November there was less confidence about the Australian economy going forward. Now 50% (down 3.7ppts) of businesses say they expect Australia to have good times financially in the next 12 months (cf. 42.6% bad times, up 4.1ppts) and 52.6% (down 3.1ppts) say they expect good times for Australia over the next five years (cf. 38.9% bad times, up 4.0ppts).

Michele Levine, Chief Executive Officer, Roy Morgan Research says:

“Business Confidence increased for the third straight month, up by 0.5pts (+0.4%) in November to 116.7. This is the highest Business Confidence has been since the Federal Election in July when the Turnbull Government was returned with a majority of only one seat.

“Analysing the movement of Business Confidence across the States in November shows a strong increase in Queensland being the main driver of this month’s increase – now clearly above the national average along with a slight improvement in Victoria while Tasmania continues to have the highest Business Confidence of any State.

“In contrast Business Confidence is virtually unchanged in Australia’s largest State of New South Wales and is down significantly in the mining State of Western Australia – now clearly the lowest of any State. Business Confidence in South Australia also fell for the second straight month following the State’s widespread blackout in late September and is now in line with the national average.

“In terms of industries, the most confident industries in November were the Retail trade industry heading into the most important time of the year over the Christmas-New Year’s sales period, Accommodation and food services which also traditionally benefits from the Summer holiday period and Public administration, safety and security – all of these industries were more than 10% above the national average.

“In contrast, several industries were well below the national average including Electricity, gas, water and waste – which has been hit by the power problems in South Australia and also the impending closure of ‘legacy’ power stations like Hazelwood in Victoria, Transport, postal and warehousing and Wholesale trade which both dropped in November.

“The strengthening Business Confidence is encouraging news for the ‘large army’ of unemployed and under-employed Australians. The latest Roy Morgan employment estimates by State (full release available here) show clearly that unemployment and under-employment are an increasing problem for Australia’s smaller States.

“Over the past year total unemployment and under-employment has soared in Queensland (now 20.3%), Western Australia (19.6%), South Australia (23.0%) and Tasmania (22.5%) while remaining below the national average in the two largest States of New South Wales (15.2%) and Victoria (16.0%). The latest Roy Morgan real employment estimates show 2.454 million (19.1%) Australians were unemployed or under-employed in October 2016.

Trump and Australia

“Finally all Australians must consider the implications for Australian businesses with the election of Donald Trump as the next US President. Trump campaigned on strong rhetoric of over-turning bad ‘trade deals’ and ‘creating jobs’ for the millions of unemployed Americans – which Trump claimed was really over 20% of the American workforce.

“Will President Trump stand by his campaign promises or move away from them as President? The major test for Trump is whether he can convince the Federal Reserve not to raise interest rates whilst real unemployment and under-employment in America (well over 20%) is clearly higher than the ‘unbelievable’ figures released by the US Bureau of Labor Statistics showing US unemployment of only 4.6% in November.

 “In addition, Trump’s stance on US free-trade ‘deals’ will be particularly important to the Australian economy which has benefited from free-trade agreements with important trading partners like China, Japan and South Korea. If Trump increases trade barriers with important Australian trading partners this will obviously impact on Australian Business Confidence which so far has been steady since the Trump victory.”

For comments or more information please contact:

Norman Morris
Industry Communications Director
Office: +61 (3) 9224 5172
Mobile: 0402 014 474