Overall business confidence has fallen by seven points to 94.3 in September 2024 according to Australian research firm Roy Morgan, with new data showing rising concerns about the next 12 months.
The trepidation of the next 12 months came after the Stage 3 tax cuts gave a short-term boost to business confidence in July and August.
Businesses lost confidence about their own prospects over the next 12 months in September with a falling plurality of 41.1 per cent (down 5.1ppts) of businesses that expect to be ‘better off’ financially this time next year.
There was also a significant decline in business confidence in investing in growth with just over a third (36 per cent - down 4.5ppts) saying the next 12 months is a ‘good time to invest in growing the business’ - the lowest figure for this indicator for well over four years since April 2020.
In contrast, a rising plurality of 45.6 per cent (up 7.9ppts) say the next 12 months is a ‘bad time to invest in growing the business’.
In terms of the economy, now a slim, and falling, majority of 52.2 per cent (down 4.2ppts) of businesses expect there will be ‘good times’ for the Australian economy over the next year compared to only 44.7 per cent (up 3ppts) that expect ‘bad times’.
Business Confidence is now 16.9 points below the long-term average of 111.2, but a large 10.8 points higher than the latest ANZ-Roy Morgan Consumer Confidence of 83.5 for September 30 - October 1, 2024.
The retail sector joined five other industries among the least confident in September, hitting a score of 92.7. Despite being up by around two points compared to last month, the sector has dropped to the third-lowest place, just behind wholesale and construction.
Roy Morgan reported that this is a worrying sign ahead of peak season, adding that retailers will be looking for a spending injection from Australians shopping at the Black Friday and pre-Christmas sales.
The agriculture sector remains at the lowest place at 75.2 in September, below transport, postal and warehousing at 81.8.
Over the last two months there were ten industries with business confidence in positive territory above the neutral level of 100.
The most confident industry in August and September 2024 was public administration and defence on 130.4, up 44 points on a year ago, followed by electricity, gas and water on 120.7, up 18.9 points on a year ago.
In a clear third place is education and training on 118.2, but down 1.9 points on a year ago when confidence in the sector was soaring after the full re-opening of Australia’s borders in late 2022 and well into 2023.
In fourth place is recreation and personal on 114.8, and up 14.1 points on a year ago, and filling out the top five is Mining on 114.3, and up a large 32 points on a year ago.
Roy Morgan CEO Michele Levine said in spite of the decline in business confidence, there was some good news for businesses in September as the official ABS monthly inflation figures for August showed annual inflation dropping to 2.7 per cent. This is down a large 0.8 percentage points from July, and within the Reserve Bank of Australia’s target range of 2-3 per cent for the first time since 2021.
“If other indicators of inflation continue to trend in this direction, the Reserve Bank will soon be embarking on a new cycle of interest rate cuts - as their central bank counterparts overseas have already begun.”