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Business confidence back on the up

Business confidence increased by more than four points in July, according to the Roy Morgan index, delivering a ray optimism after two straight months of declines.

The latest Roy Morgan Monthly Business Confidence Survey reported that confidence rose from 105.4 in June to 109.6 in July.

Education and Training (129.0), Information, Media and Telecommunications (124.3) and Mining (122.0) were the most optimistic industries, according to the survey.

Despite continued global uncertainty, there were a number of positive factors that appear to have impacted on business sentiment: the Australian share market rose over 4 percent in July, consumer confidence improved, and the Reserve Bank of Australia (RBA) Governor Glenn Stevens gave a positive assessment of the Australian economy.

The recent Greek election result has also eased concern in Europe, and the reduction in the cash rate has helped to improve business sentiment.

The survey found that an increasing number of businesses believe Australia will be facing “good times” financially over the next 12 months and over the longer term. However, only 51 percent think that it will be a good time to invest in the business over the next 12 months.

“The small recovery in business confidence in July provides some optimism that we have passed the worst, but the situation remains fairly fragile given the uncertain global economic outlook,” explained Roy Morgan Industry communications director Norman Morris.

“The ultimate impact of any reductions in interest rates on economic activity will be influenced by the willingness of business to borrow and banks to lend, as well as the extent to which any reduction in official rates are passed on,” he added.

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Carly McKenna

Carly McKenna

Carly McKenna is currently working as a journalism intern for Dynamic Business. She is also a third-year Media student at Macquarie, a music enthusiast, and a lover of all things literary.

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