Roy Morgan Research has released its Business Confidence Index for May, which recorded a big post-Budget fall in sentiment, driven by declining perceptions about Australian economic conditions, along with falling business investment intentions:
Roy Morgan Research’s latest Business Confidence survey in May 2014 fell 5.5% from April (to 114.3) following the release of the National Commission of Audit Report and the Federal Budget. Business confidence is now 16.1% below the peak of 136.3 in October 2013 following the new government and 7.4% below the average over the last 12 months…
The main reason for loss of confidence in May was the decline in the proportion of businesses feeling that economic conditions in Australia would improve over the next 12 months. This is now at its lowest level since July 2012.
As a result of this decline in outlook for the economy, there was a drop to 54% (from 58%) in the proportion thinking that the next 12 months would be a good time to invest in growing their business, the lowest level since June 2013.
The hopes for rebalancing also took a hit in the survey:
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Mining remains the most confident sector (146.4), followed by finance and insurance (143.1). The high-profile sectors in which hopes for economic recovery have been focused remain below the average confidence level and are showing no improvement, with retail on 107.0, construction at 113.2 and manufacturing at 112.9.
All states now have very similar levels of confidence, with Western Australia narrowly the highest, followed by South Australia, Tasmania, Victoria, New South Wales and Queensland. In May, all states showed some decline.
Add this to the growing list of marginal indicators suggesting that conditions have worsened since the March quarter national accounts were released.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
