Although considerable economic problems remain it appears that there has been some reduction in global economic uncertainty, particularly in relation to Europe where the ECB appears to be taking steps to ease the crisis there and despite some negative economic news from the US there has been some increased optimism that the Federal Reserve may be prepared to provide further stimulus.

In Australia there has generally been positive news in relation to the share market and Consumer Confidence improving during August. Issues relating to the Carbon Tax appear to have had less impact than anticipated.


Roy Morgan Business Confidence Rating


Source: Roy Morgan Business Survey, Dec10 – Aug12, Average monthly sample n=1,869.


The two components of the Business Confidence Index that have had the greatest positive impact have been the increase in the belief that Australia will be facing “good times” financially over the next 12 months and the increased proportion of businesses that think that the next 12 months would be a “Good time to invest in growing the business”. Despite this improvement, only 55% (up from 51% in July) think that it will be a good time to invest in the business over the next 12 months but this is the highest level since February 2012.

Western Australian businesses remain the most positive but it is anticipated that the considerable drop in confidence in the mining industry is likely to have a negative impact as a result of reductions in commodity prices. The other states remain very similar in terms of business confidence with Victoria in second place narrowly ahead of NSW.

The most positive industries are “Public administration” (130.7), “Education and Training” (129.4) and “Information media and Telecommunications” (127.6). In January “Mining” was the most confident industry but it has slipped back to be in fourth place currently. The global economic situation, declining commodity prices and tax changes appear to have put a dent in the confidence of the mining industry. The least confident industries currently are “Transport, postal and warehousing” (99.5), “Construction” (102.1), “Agriculture” (104.6) and “Retail” (109.7).


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

“The recovery in business confidence in July and August provides some optimism that we have passed the worst but the situation remains fairly fragile given the uncertain global economic outlook and weakness in commodity prices having the potential to impact severely on Australia. The ultimate impact of any reductions in interest rates on economic activity will be influenced by the willingness of business to borrow which in turn will be dependent on how business sees the economic conditions improving over the next few years.”

About Roy Morgan Business Single Source Survey:

The Roy Morgan Research Business Survey began in May 2010 and currently conducts more than 2,000 interviews per month to measure Business Confidence. Around 1,100 of these interviews also cover all aspects of Business Finance with the remainder covering Telecommunications.

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