Business confidence soars on reopening

From Roy Morgan Research:

This month, October 2021, Roy Morgan Business Confidence increased 10.7pts (+10.2%) to 115.3. This is the biggest increase in Business Confidence so far during 2021 and comes as long-running lockdowns have ended in Greater Sydney, Greater Melbourne and the ACT. Business Confidence is a significant 16.6pts (+16.8%) higher than a year ago in October 2020 (98.7).

Business Confidence in October 2021 was back above the long-term average of 113.8 for the first time since July 2021. Businesses grew increasingly confident about the performance of the Australian economy with a majority of 55.1% of businesses expecting ‘good times’ for the economy over the next 12 months and a similar majority of 55% say the next 12 months is a ‘good time to invest in growing the business’.

Business Confidence for October was over 8pts higher than the latest ANZ-Roy Morgan Consumer Confidence of 107.0 for October 16/17, 2021.

Business Confidence in October 2021 is highest in South Australia and Western Australia, but lowest in Victoria as the State finally emerged from its record sixth lockdown

Business Confidence in October was up strongly in all six States from a year ago in October 2020. The biggest increase was in South Australia in which Business Confidence increased by a massive 46.5pts (+50%) to 139.5 to be higher than any other State.

South Australia’s response to COVID-19 has been the most successful of any State by several measures with only 4 deaths in the State due to the virus – fewer deaths than any other State.

Western Australia has clearly the second highest Business Confidence at 130.8, up 22.4pts (+20.7%) from a year ago and is now over 15pts higher than the national figure of 115.3. There have been no lockdowns in Western Australia, or in Capital City Perth, for nearly four months since early July, a longer stretch without a lockdown than any other State.

Business Confidence in Queensland is again just below the national average at 115.2, although up significantly by 24.7pts (+27.3%) from a year ago. In the past week Queensland Premier Annastacia Palaszczuk finally announced that Queensland would fully re-open its borders to NSW and Victoria by mid-December – just in time for Christmas and the Summer holidays thereafter.

The re-opening of Greater Sydney in mid-October has contributed to an improvement in Business Confidence in Australia’s most populated State which is up 7.5pts (+7.1%) to 112.9 in NSW. The State has been on the front foot in transitioning to ‘living with COVID’ and was the first to announce international borders would be re-opened in early November for Australian citizens and residents to return home without enduring any period of quarantine.

Southern Tasmania endured a short and sharp lockdown for three days in mid-October, but the restrictions did not prevent Business Confidence continuing to recover and now up 36.3pts (+47.5%) to 112.8 compared to a year ago.

For the second straight month Business Confidence was the lowest of all States in Victoria at 105.8, an increase of 10.8pts (+11.4%) on a year ago. Greater Melbourne finally emerged from its record sixth lockdown in late October and restrictions will continue to ease over the coming four weeks with most restrictions set to be removed by the end of November…

An increasing majority of businesses expect there will be ‘good times’ for the Australian economy over the next year and say now is a ‘good time to invest in growing the business’

  • An increasing plurality of businesses, 49.0% (up 2.2ppts), expect the business will be ‘better off’ financially this time next year, while only 14.3% (down 4.4ppts) expect the business to be ‘worse off’;
  • In addition, a clear majority of businesses, 55.0% (up 7.6ppts), said the next 12 months is a ‘good time to invest in growing the business’, while 37.5% (up 7.3ppts) said it will be a ‘bad time to invest’;
  • An increasing majority of businesses are confident about the Australian economy’s performance over the next year with 55.1% (up 4.7ppts), expecting ‘good times’ for the Australian economy over the next year while 47.9% (down 5.8ppts), expect ‘bad times’;
  • Businesses have also grown increasingly confident about the longer-term outlook with a majority of 52.6% (up 2ppts) expecting ‘good times’ for the Australian economy over the next five years compared to 41.5% (down 2.9ppts) which expect ‘bad times’;
  • Just over a third of businesses, 35.9% (up 7.5ppts), said the business is ‘better off’ financially than this time a year ago while the same proportion, 35.9% (down 8.7ppts), said the business is ‘worse off’…

Michele Levine, CEO of Roy Morgan, says Business Confidence has increased for two straight months and is now up 13.8pts (+13.6%) since bottoming at 101.5 in August when over half of the country in NSW, Victoria and the ACT was in lockdown…

“The re-opening of Australia’s domestic borders to over 20 million people along the Eastern sea-board is clearly beneficial to businesses in the Accommodation & Food Services industry. Confidence in this industry has increased by more than any other from a year ago, more than doubling and up by 61.1pts (+104.2%) to 119.7 in the last two months – fifth highest of any industry.

“In addition to the removal of domestic border restrictions the international border is set to come down in early November when fully vaccinated Australian citizens and permanent residents will be allowed to fly into both NSW and Victoria without undergoing any period of quarantine and only requiring a negative test for COVID-19 for entry to the country.

“Overall Australian businesses are growing more confident about the next year with a majority of 55.1% (up 4.7ppts) now expecting ‘good times’ for the economy over the next year and 55% (up 7.6ppts) saying now is a ‘good time to invest’ in growing the business.

Full report here.

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