Roy Morgan Research yesterday released its business confidence survey of over 2,900 businesses in February, which registered its second consecutive monthly increase to 123.8, from 122.5 in January 2013, and was the highest reading since April 2011 (see next chart).
According to the Media Release:
This increase in confidence is due largely to the fact that Australian businesses are now becoming cautiously optimistic about the future of the Australian economy over the next 12 months and more particularly over the next five years. Currently nearly three quarters (73%) of Businesses consider that Australia will have ‘continuous good time during the next five years” – the highest level in nearly 2 years…
Not all industries are showing the same degree of optimism, although they are all currently registering confidence scores of over 100 which shows on balance they have a positive outlook. The most confident industries are “Finance and Insurance” (139.7), “Education and Training” (133.8) and “Health care and Social Assistance” (130.5). These have all displaced “Mining” which has fallen back in February to 124.2. The major industries that are struggling and currently showing no real improvement in February are “Agriculture, Forestry and Fishing” (104.4), “Manufacturing” (111.3) and “Construction” (111.7). In February some improvement was seen from “Retail” (117.6), “Wholesale” (129.5) and “Finance and Insurance” (139.7).
Despite problems in the mining sector, WA remains the most confident state, followed by VIC and NSW. The other states (SA, Qld and Tas) are all below average but are showing signs of improving. With Business Confidence improving, the majority now consider that the next 12 months will be a good time to invest in their business (58%). This is the highest level since May 2011 and a positive sign for economic growth…
“Despite the current positive business outlook it remains to be seen whether this trend can be sustained as the stock market is likely to react very quickly to any negative news either overseas or locally plus the potential for ‘distractions’ caused by the lead up to the Federal Election.
“The high Australian dollar remains a problem for a number of sectors particularly manufacturing. In addition although the official ABS unemployment figure remains low there is no credibility in the ABS figure due to a ‘rogue’ sample being included and the fact that employment growth has been largely in part-time jobs. Adding to the lack of ABS unemployment credibility is the concern that ABS questioning ignores a large number of people who are looking for work or more work i.e. under-employed. (See the latest Roy Morgan February unemployment estimate — 10.9%).
“Finally, what needs to be watched is the weekly Roy Morgan Consumer Confidence rating — how consumers feel is important — the Roy Morgan Consumer Confidence rating for February 2013 was at 119.7, and higher last week 121, which is still high and about the same when compared to the Roy Morgan Business Confidence rating of 123.8.”
The increase in the Roy Morgan business confidence survey follows last week’s release of the NAB Monthly Business Survey, which registered a fall in business confidence in February to levels below the long-run average (albeit higher than end-2012).
