Following yesterday’s shocker from NAB, Roy Morgan Research (RMR) has released its own business confidence survey for February, which slid 9.2 points (down 8.0%) to 105.7, and is tracking near the lowest level in three years (see next chart).
According to RMR, the slide in confidence was broad-based, with investment intentions, in particular, hitting the lowest level since September 2012:
Roy Morgan Research’s Business Confidence survey in February showed a decline despite the RBA’s decision to lower the cash rate… The February confidence level is now well below pre-election levels and 22.5% lower than its peak of 136.3 in October 2013, immediately following the Federal Election.
The decline in business confidence occurred across all components of the index but was mainly due to a deterioration in the outlook for the Australian economy over the next five years. This less optimistic outlook led to a decrease in the number of businesses considering that the next twelve months would be a good time to invest in growing their business, a bad sign for economic growth…
“The industries that it was hoped would make up for the decline in the iron ore price and mining investment continued to show a rather subdued outlook, and are unlikely to make up for the loss. Construction is now showing signs of weakness, with confidence now below average; while manufacturing has lifted slightly and retail is only average. The most positive major sectors are ‘finance and insurance’, ‘rental, hiring and real estate’, ‘information media and telecommunications’ and ‘personal, repair and other services’.
“Casting a shadow over the country’s economic growth prospects is the fact that businesses are now less confident about investing in expansion. The proportion of those who believe that ‘the next twelve months would be a good time to invest in growing their business’ is now down to its lowest level since September 2012. With a big drop in investment by the mining industry and the less positive outlook by other sectors for growth for the next five years, this will be a major concern for state and federal governments.
It seems the only areas of the economy firing are those attached to the housing bubble.
