Roy Morgan Business Confidence was down by 2.5 points to 106 in March 2025, despite the Reserve Bank of Australia cutting interest rates for the first time in over four years in mid-February this year, by 0.25 percentage points to 4.1 per cent.
The biggest domestic news in March revolved around the impact of Cyclone Alfred which hit the Queensland and New South Wales coasts in early March – causing extensive flooding – and delaying the Federal Election for nearly a month until early May.
Despite the decline during March, Roy Morgan Business Confidence has now had a positive rating above 105 for six months in a row – the first time this has happened since July 2021.
According to Roy Morgan, businesses are confident about the year ahead with a majority of 60.7 per cent expecting ‘good times’ for the Australian economy over the year ahead compared to just 34.3 per cent that expect ‘bad times’.
Over 4 in 10 (44.8 per cent) expect their own business to be ‘better off’ financially this time next year compared to 17.3 per cent expecting to be ‘worse off’.
Businesses also want to invest with 43.4 per cent that say the next 12 months is a ‘good time to invest’ compared to 34.4 per cent that say the next 12 months is a ‘bad time to invest’.
Business Confidence is 4.3 points below the long-term average of 110.3, but a large 19.2 points higher than the latest ANZ-Roy Morgan Consumer Confidence of 86.8 for March 31 – April 4, 2025.
Roy Morgan CEO Michele Levine said the drop in business confidence in March is the largest over the last six months.
“Although the Reserve Bank decided to cut interest rates in late February… the cut has not provided a boost to Business Confidence as the Bank’s statement expressed caution about further interest rate cuts due to the uncertain nature of the global, and local, economies,” Levine said.
“Since March ended, there has been further uncertainty introduced when US President Donald Trump announced on what he called ‘Liberation Day’ (Wednesday, April 2, 2025) that the United States would levy tariffs on almost all countries around the world of at least 10%. Luckily, for Australia, the tariff Trump imposed on Australian exports was at the minimum level of 10%.
“The imposition of these new tariffs has had a swift reaction on global stock-exchanges, including in Australia, which have fallen sharply. However, it is early days, and a lot could change over the next few weeks, so the exact impact of these new policies on the Australian economy and Australian businesses will take time to assess over the next few weeks and months.”
Since the announcement, Trump has since backtracked on some of his more hefty tariffs, dropping most down to a base of 10 per cent, including for Australia. However, his tariff war with China continues, ramping up the total tariff for China to 125 per cent.
On a state-by-state basis business confidence is in positive territory in four states led by Western Australia at 133.6 in the month the ALP Government led by Premier Roger Cook was re-elected for a third term in a landslide winning 46 out of 59 seats in the WA Legislative Assembly.
“The three largest States also have positive business confidence in March including Queensland (110.7), New South Wales (104.3) and Victoria (102.9),” Levine said. “In contrast, business confidence is now lowest in the two smallest States of Tasmania (95.7) and well below 100 in South Australia (79.8).”
Across the industries, electricity, gas, water and waste services led the charge at 143.8, followed by financial and insurance services on 135.3.
Other confident industries include professional, scientific and technical Services on 115.9 and education and training on 115.5. Education and training has now been amongst the top five most confident industries for nearly three years since June 2022.
“At the other end of the scale is wholesale trade on only 79.6, just below agriculture, forestry and fishing on 81.4 and the lowest average business confidence over the last two years of only 81.1.
“These are the only two industries with business confidence in negative territory below the neutral level of 100.”
Retail was not mentioned in the latest release, however in January retail was mentioned as being above the base of 100.