Australian businesses are facing a more cautious start to 2026, with Roy Morgan Business Confidence dropping 7.6 points in January to 97.4 – its lowest level in nine months, since April 2025 (96.7).
The fall comes just as the Reserve Bank (RBA) lifted the cash rate by 25 basis points to 3.85% in early February, following hotter‑than‑expected inflation prints.
For mortgage brokers, the message is clear: commercial borrowers are turning more cautious as weaker business confidence and a fresh RBA hike weigh on expansion plans.
The latest Roy Morgan survey shows sentiment is now sitting 12.3 points below its long‑term average, although it remains well above consumer confidence, underlining that households are even more worried than businesses.
Michele Levine (pictured), CEO of Roy Morgan, linked the January slide directly to the renewed inflation pulse and expectations of rate hikes.
“Roy Morgan Business Confidence dropped 7.6pts to 97.4 in January, hitting its lowest level in nine months since April 2025 (96.7),” Levine said in a media release. “The decrease came after the ABS released two high official inflation figures in January for November 2025 (3.4%) and December 2025 (3.8%) – both above the Reserve Bank’s preferred target range of 2-3% over the course of the cycle.”
The biggest drag on the index was businesses’ views of their own outlook. Only a third of firms expect to be “better off” in 12 months, while almost a quarter see themselves “worse off”, a net deterioration of 18.5 percentage points. That pessimism is reinforced by a slump in sentiment around whether now is a good time to invest, with more businesses now calling the year ahead a “bad time to invest”.
State results are patchy, which matters for geographically focused broker groups.
Levine highlighted that “business confidence is above average in Queensland (107.2), the only state to have a higher rating than a year ago.”
New South Wales, Victoria, Western Australia and South Australia all sit below the neutral 100 mark, signalling a more defensive stance in several key broker markets.
For brokers specialising in commercial and investment lending, the industry breakdown is crucial.
Confidence is strongest in electricity, gas, water & waste, mining and rental, hiring & real estate services, with all three more than 20 points above the national average.
At the other end of the spectrum, public administration & safety, retail trade, and agriculture are deeply negative, pointing to more conservative borrowing and slower deal flow in those segments.
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