Business confidence falls again

James Fernyhough
Aug 10, 2015, updated Aug 10, 2015

Business confidence has taken another hit, suggesting the minor boost following the May budget may have worn off.

Roy Morgan’s latest business confidence survey found that sentiment fell by 2.2 per cent in July.

Business confidence is now down 5.7 per cent from a year ago.

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Businesses were particularly pessimistic about the outlook for the Australian economy over the next 12 months, with 49 per cent saying it would be bad. That’s a seven percentage point jump from June, and an even bigger jump from a year ago, when only 35 per cent of businesses said the outlook was bad.

Industries that recorded particularly low levels of confidence included manufacturing, agriculture, accommodation and food services, health care and personal services. The construction industry, meanwhile, was flat.

The industries showing above-average confidence included finance and insurance, rental and real estate, and the wholesale trade.

Roy Morgan’s industry communications director Norman Morris said: “While there were some positive external factors impacting on business and consumer confidence during July – such as reduced anxiety over the Greek financial problem, less publicity about China’s slowing growth rate, and share-market volatility – the basic problems concerning the local economy remain.

“In Australia there are still major headwinds, including the low iron ore price, no resolution to the worsening budget deficit, and the fact that over two million Australians are either unemployed or underemployed.

“The end result of these and other problems has been a large decline in the Roy Morgan Government Confidence Rating (GCR) among consumers, which has dropped from 99.5 in July 2014 to only 91.0 currently. This drop in rating is mainly due to the fact that nearly half (46.5 per cent) of the population now consider that ‘things in Australia are heading in the wrong direction’, well up from 41.5 per cent 12 months ago.”