Roy Morgan Research (RMR) has released its business confidence survey for January, which has reported a third consecutive month of decline, with the index falling 3.9 points (3.4%) in January and 8.7 points (7.3%) over the past three months, to now be tracking below the five-year average:
Roy Morgan Research’s Business Confidence declined by a further 3.9 points in January (down 3.4% to 110.6), following on from the December decline of 4.2 points (down 3.5%) and the November drop of 0.6 points (down 0.5%). The combined drop of 8.7 points (down 7.3%) over the last three months is an indication that the initial increase in confidence following Malcolm Turnbull becoming Prime Minister has been outweighed by the negative local and international economic environment which saw the ASX decline by 8.6% in the first three weeks in January. Despite the negative trend in business confidence over the last three months it is still 7.8% above the level prior to the appointment of the new Prime Minister.
These figures are the results of 1,010 interviews with a cross section of businesses across Australia.
The level of Business Confidence in January is still marginally positive for the economy but the decline over the last three months now puts it below the five-year average (116.8) and is a sign that confidence is very fragile and easily impacted by negative economic events…
The drop in Business Confidence in January was mainly due to deterioration in the outlook for the Australian economy over the next 12 months, which has now fallen to its lowest level since August 2015. Only 52% of businesses now think that Australia will face good economic conditions over the coming year, well down on the 5 year average of 60.2%. Despite this poor outlook for Australia for the next 12 months, businesses still maintain a positive attitude towards expanding, with 60% agreeing that the next 12 months will be a good time to invest in growing their business. This is higher than the five year average of 56.4%…
Norman Morris, Industry Communications Director, Roy Morgan Research says:
…“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… The biggest declines were in South Australia and New South Wales.”.
The NAB Business Survey, released earlier this week, also faded after its recent good run, but remained at solid levels overall.
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.
