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Business Confidence jumps again in April – up 7.4pts to 123.1

Source: Roy Morgan Business Single Source (Australia), December 2010 - April 2016. Average monthly sample last 12 months = 1,032.
Roy Morgan Research’s Business Confidence rose again in April (up 6.4% to 123.1) and has now risen 12.5 pts over the last three months since a 2016 low of 110.6 in January. The rise in Business Confidence comes after more improvement on the Australian share-market in April – the All Ordinaries closed yesterday at 5,250.9 (up 1.9% or 99.1pts from March 31, 2016) as commodity prices rebounded in recent months following increased global stimulus.

Another positive is the removal of any uncertainty about when this year’s Federal Election will be held. The Senate cross-benchers held firm to their opposition to the Turnbull Government’s ABCC Bill and Turnbull has since confirmed Australians will go to the polls on Saturday July 2, 2016.

The level of Business Confidence in April is clearly positive for the economy overall and now above the 5yr average (116.8). The strongest indicators in April relate to the upcoming year with expectations of business performance over the next 12 months (+38.1) and whether the next 12 months will be a ‘good/bad time to invest’ (+26.3). Roy Morgan Business Confidence results are based on 1,000 interviews with a cross section of businesses across Australia.

Monthly Business Confidence -- Australia

Business Confidence jumps again in April - up 7.4pts to 123.1
Roy Morgan Business Single Source (Australia), December 2010 - April 2016. Average monthly sample last 12 months = 1,032.

The rise in Business Confidence in April was mainly due to increased confidence about businesses being better off financially in Australia than a year ago and in the next year. Now 41.1% (up 4.8ppts) of businesses say business is better off than a year ago while only 27.5% (down 1.3ppts) believe it to be worse off.

Also 50.6% (up 9.6ppts) of businesses say they will be better off financially next year while only 12.5% (down 5.6ppts) believe the business will be worse off. In addition, there was increased confidence regarding investment for growing the business in the next year – only 29.3% (down 7.8ppts) say the next 12 months is a bad time to invest in growing the business.

Although Business Confidence has improved strongly in April, ANZ-Roy Morgan Consumer Confidence has finished April at 111.7 (April 23/24, 2016), a fall of 2.8pts (-2.4%) from March 26/27, 2016 (114.5). The impact of next week’s Federal Budget on both Consumer Confidence and Business Confidence will be important as we head towards a Federal Election in July.

Norman Morris, Industry Communications Director, Roy Morgan Research says:

“Business Confidence has increased for the third straight month – up 7.4pts (+6.4%) to 123.1 in April – the highest Business Confidence has been since January 2014 (131.5) early in the term of the then new L-NP Government. The strong performance of Business Confidence in recent months has mirrored the rise in the Australian All Ordinaries Index since bottoming at an intra-day low of 4,762.10 in mid-February the Index has risen to a close of 5,250.90 overnight (an increase of over 10.0% over the last two months).

“In addition, Australians now have renewed certainty after Senate cross-benchers rejected the Turnbull Government’s attempts to re-legislate the contentious ABCC Bill, and since this rejection Turnbull has confirmed Australians will go to a Double Dissolution Federal Election to be held on Saturday July 2, 2016. However, although uncertainty about the election date has been resolved, the tightness of opinion polls – the most recent Morgan Poll shows the L-NP 50% cf. ALP 50% - raises the prospect of Australia facing another hung Parliament.

“Looking at the States shows April Business Confidence led higher by increases in New South Wales, Queensland, Tasmania and Western Australia – although WA continues to lag the rest of the nation over 6% below the national average. Business Confidence in both Victoria and South Australia was largely unchanged and remains highest in Tasmania and NSW.

“Looking at Business Confidence by business size reveals an ongoing stark disparity between the different sizes of business. Business Confidence is, and has been, closely correlated to size of business for some time now with Medium/ Large businesses the most confident followed by Small businesses and Micro businesses with the lowest Business Confidence. Obviously next week’s Federal Budget will be keenly watched by businesses of all sizes given the potential for changes in business taxation or even additional tax breaks for businesses to have an impact on businesses bottom line over the following year.”

For comments or more information please contact:

Norman Morris

Industry Communications Director

Office: +61 (3) 9224 5172

Mobile: 0402 014 474