Roy Morgan business confidence surged by 12.4 points in October, reaching 106.7 – the highest level recorded since April 2022, driven by a sharp decline in inflation.
ABS reported monthly inflation falling from 3.5% in July to 2.7% in August and further to 2.1% in September, comfortably within the Reserve Bank’s (RBA) target range of 2-3%.
“Business confidence increased 12.4pts to 106.7 in October, driven by a surge in confidence about investing in growing the business,” said Michele Levine (pictured above), CEO of Roy Morgan.
Businesses are increasingly optimistic about the coming year. A growing 46.3% of businesses expect to be financially better off in 12 months, while 59% anticipate “good times” for the Australian economy.
Investment sentiment also improved, with 42.9% saying now is a good time to invest in growth.
“Now a rising plurality of businesses, 42.9%, say the next 12 months is a ‘good time to invest’ in growing the business compared to only 35.2% that say it’s a ‘bad time to invest,’” Levine said.
State-specific trends revealed a broad increase in optimism.
New South Wales leads with a confidence score of 111.6, followed by Victoria at 104.4. South Australia saw the most dramatic rise, more than doubling its score from a year ago to 102.4.
Tasmania, however, remains the only state in negative territory, with a score of 89, Roy Morgan data showed.
Among industries, public Administration and defence topped the charts with a confidence rating of 160.1, followed by education and training at 127.3. Meanwhile, transport and warehousing (72.6) and mining (78.3) lagged significantly.
“The rapid reduction in inflation is building expectations among many, including businesses, that the Reserve Bank will soon embark on a new cycle of interest rate cuts,” Levine said.
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