Roy Morgan’s business confidence index posted a boost in January, reaching 93.2, a 2.1-point increase from December – marking the first instance of consecutive monthly gains in the index since early last year.
Despite this rise, business confidence has remained below the neutral benchmark of 100 for a record-breaking 12 consecutive months, the longest duration of negative sentiment since the index began in 2010.
“Driving the small increase in business confidence in January was a slight improvement in views on the performance of the Australian economy,” said Michele Levine (pictured above), CEO of Roy Morgan.
“Now 38.3% (up 3.1ppts on a month ago) of businesses expect ‘good times’ for the economy over the next year and 38.2% (up 1.2ppts) expect ‘good times’ for the economy over the next five years.”
Business sentiment towards the Australian economy remains wary, with 59.5% anticipating challenging times in the upcoming year and nearly as many, 56.7%, foreseeing difficulties over the next five years.
Despite these concerns, there's a silver lining as businesses show relative optimism regarding their own financial outlook for the upcoming year, with 42.3% expecting improvements, compared to just 25% who are expecting they will be “worse off.”
Business confidence currently stands 18 points below its long-term average of 111.2, yet it is 10.6 points above the recent ANZ-Roy Morgan Consumer Confidence, which was 82.8 for the week of February 12-18, 2024.
Business confidence has declined from the previous year, with the most significant drop observed in Western Australia. Despite this fall, Western Australia still boasts the highest business confidence of any state.
“On a state-by-state basis, business confidence is in positive territory in only two states – WA (109.0) and SA (100.5),” Levine said. “The measure is in negative territory in the four other states of Queensland (95.2), Tasmania (92.4), New South Wales (91.8) and is lowest of all in Victoria at only 86.7.
Similarly, industry-specific confidence levels varied widely, with only seven out of 18 industries surveyed having business confidence levels above the neutral 100 mark.
Community services, the most confident industry from December to January, boasts a business confidence rating of 112.7, slightly surpassing accommodation and food Services at 112.6, positioning both industries more than 20% above the national average.
“Although the next few months look tough for the Australian economy, there is considerable hope of a stronger end to the year with the potential for interest rates to be cut, inflation coming down, and the modified stage 3 tax cuts increasing consumer’s take home pay from mid-year,” Levine said.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
