Roy Morgan’s business confidence index fell by seven points in September, landing at 94.3, as concerns over the next 12 months grew.
After a short-term boost following the Stage 3 tax cuts in July and August, businesses are now less optimistic about their future prospects, with 41.1% expecting to be financially better off in the next year – a 5.1-percentage-point drop from the previous month.
Confidence in investing for business growth also plummeted, with only 36% of businesses considering the next 12 months a good time to invest, the lowest figure since April 2020.
On the flip side, 45.6% believe it’s a bad time to expand, a sharp rise of 7.9 percentage points.
“Now only 36% of businesses say the next 12 months will be a good time to invest – the lowest in over four years,” said Michele Levine (pictured above), CEO of Roy Morgan.
The broader economic outlook also took a hit, with only 52.2% of businesses expecting “good times” for the Australian economy in the coming year, down 4.2 percentage points.
Meanwhile, 44.7% foresee “bad times” ahead. Over a five-year horizon, pessimism grew, with 59.1% expecting challenging times for the economy, compared to just 31.2% who remain optimistic.
Despite the monthly decline, business confidence remains higher than a year ago in key states, with Queensland seeing the largest improvement, rising 22.3 points to 99.2.
New South Wales and Victoria also saw modest gains, up 7.9 points and 8.1 points, respectively.
Western Australia still leads in business confidence with a score of 103.3, though this is down from last year.
However, South Australia and Tasmania experienced significant drops in confidence. South Australia fell by 13.4 points to 87.3, while Tasmania recorded a steep decline of 34.1 points, now at just 78.7.
Agriculture and transport, postal and warehousing were the least confident sectors, with scores of 75.2 and 81.8, respectively.
Public administration and defence remains the most confident sector with a rating of 130.4, followed by electricity, gas, and water (120.7) and education and training (118.2).
Recreation and personal and mining also performed well, both scoring over 114.
“At an industry level, public administration and defence is the most confident industry,” Levine said.
Although business confidence dipped, there was some positive news in the form of lower inflation.
Annual inflation for August fell to 2.7%, down from 3.5% in July, aligning with the Reserve Bank’s target range for the first time since 2021.
“If inflation continues on this path, the Reserve Bank could begin cutting interest rates soon, as we’ve seen from other central banks globally,” Levine said.
Despite ongoing challenges, businesses are holding onto cautious optimism, especially in larger states, though concerns about investment and long-term economic stability persist.
Read the Roy Morgan Business Confidence report in full here. To compare the latest figures with the previous month’s, click here.
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