Business confidence falls again

Rod Myer
Jan 28, 2016, updated Jan 28, 2016

AAP

Business confidence is on the slide according to the Roy Morgan monthly survey which found business people were 3.4 per cent less confident in the month of January.

That followed on from declines of 3.5 per cent in December and down 0.5 per cent in November.

The survey demonstrates that the combined decline of 7.3 per cent in business confidence over the last three months has wiped out some of the gains in confidence following the elevation of Malcolm Turnbull to the prime ministership last September.

• Consumers give up on houses and spend on retail
• World economy riding for a fall
• Consumer sentiment drops sharply

Despite the falls in confidence and the decline of 8.6 per cent of the Australian Stock Exchange’s S&P ASX 200 index, the Confidence index is still 7.8 per cent above the nadir in confidence just prior to Mr Turnbull’s defeat of former PM Tony Abbott.

Despite three months of decline confidence is still marginally in positive territory. But the decline does put it below the five year average of 116.8 points, a signal that confidence is very fragile and easily undermined by negative economic events.

“It is not surprising that business confidence has declined further in January given the very negative market sentiment both locally and globally during the month,” said Norman Morris, industry communications director for Roy Morgan.

“The continual publicity given to the slowdown in Chinese growth, the dramatic drops in the price of oil and other commodities and the deteriorating budgetary position at home have all impacted negatively on the ASX and business sentiment.

“A decline in confidence in January was seen across most industries including manufacturing, construction and retail- not a good sign for these sectors in which it was hoped would help make up for the collapse in mining. The most confident business sectors were rental/real estate, agriculture and wholesale trade.

“There are considerable variations in business confidence by state and in January, Tasmania was ahead, followed by Queensland, New South Wales, Western Australia, South Australia and Victoria. The biggest declines were in South Australia and New South Wales.

“With business confidence declining, it remains a challenge for both the state and federal governments to create a positive environment and plan that will encourage business growth against what is likely to remain a volatile international economic environment.”