Confidence among Australian businesses has improved in August for the fourth consecutive month, according to a report by market research company, Roy Morgan. 

The small increase was driven by an increasing number of businesses saying the next year is a ‘good time to invest in growing the business’ and an increasing majority of businesses expecting ‘good times’ for the Australian economy over the next five years.

The August Roy Morgan Business Confidence results are based on 983 detailed interviews with a cross-section of Australian businesses from each State and Territory.

Michele Levine, CEO Roy Morgan, says Business Confidence has definitively improved in the post-election period as political uncertainty has cleared. 

“The improvement in Business Confidence in recent months shows that significant Government income tax cuts as well as the RBA’s post-election interest rate cuts have given businesses renewed confidence about the future.”

“Now a majority of 54.1% of businesses expect ‘good times’ for the Australian economy over the next five years and a majority of 53.1% say the next 12 months is a ‘good time to invest in growing the business.’ Both indicators are at their highest levels since early 2018.”

More businesses feel the next year will be a good time to invest in growing the business

A majority of businesses, now 53.1% (up 4.4ppts), say the next year will be a ‘good time to invest in growing the business’. This is the highest figure for this indicator for over a year since February 2018, while only 37.8% (down 1.1ppts) say it will be a ‘bad time to invest’.

In addition, an increasing majority of businesses, 54.1% (up 2.1ppts), expect ‘good times’ for the Australian economy over the next five years (the highest figure for this indicator for over 18 months since January 2018) and 38.9% (down 0.2ppts) now expect ‘bad times’.

However, a decreasing majority of 53.1% (down 0.8ppts) of businesses expect their business to be ‘better off’ financially this time next year while 14.8% (down 5ppts) expect the business to be ‘worse off’ financially.

Analysing the trends for Business Confidence by different industries shows that although overall Business Confidence is up from a year ago the trends are not uniform across all industries. 

“The increase has not been broad-based,” Michele Levine said, “with around half the industries measured having higher Business Confidence compared to a year ago while it is down slightly for the other half.”

“Driving the increase in Business Confidence over the last year are several industries, led by Wholesale up by 13.9pts to 128, Property & business services up 26.6pts to 118.9, Retail up by 15.2pts to 116.1 and Information Media & Telecommunications up by 18.2pts to 111.5.”

Analysing Business Confidence by State shows that the smaller States are performing best. Western Australia now has the highest Business Confidence of any State in August just ahead of South Australia and Tasmania, while Business Confidence was just above the national average in New South Wales. 

Business Confidence dropped in both Queensland and Victoria which now has the lowest Business Confidence of any State, although it is still in positive territory above 100.

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