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Business confidence remains rocky despite budget boost

The latest Roy Morgan Research Business Confidence levels have revealed a May increase of 9.6 points from April, which still leaves confidence below the five-year average.

Business confidence hit 114.7 in May, the highest point since the 114.9 registered in January 2015 and well below the 136.3 high seen in October 2013.

“The increase in business confidence in May was most likely the result of a generally positive immediate media reaction to the federal budget and its focus on small business,” Roy Morgan Research Industry Communications Director Norman Morris said.

“However, the tax incentive in the budget has only had a minor impact on the level of businesses considering that the next 12 months would be a good time to invest in growing their business. Currently 57 per cent think it is a good time to invest in growth, up from 53 per cent in April.”

The figures, sourced from 1,376 businesses across Australia, revealed a 9 per cent jump in outlook confidence from April. 60 per cent of businesses believe Australia will see economic conditions improve over the coming 12 months. The outlook for next five years also saw a positive rise, up 7 per cent from April to 63 per cent in May.

Mr Morris said the lowering of interest rates and small business tax rates, along with tax write-offs on offer for expenditure up to $20,000, appear to have “limited positive impact while a number of economic headwinds remain”.

“The recent positive figures on GDP growth, for example, were followed the next day by a falling share market, weak retail sales and a record trade deficit, as well as ongoing global uncertainty regarding Greece and other areas. The problems relating to getting important budget measures past the senate, the rapidly growing estimates of the budget deficit, and the fact that over two million Australians are either unemployed or underemployed do not contribute to a positive business environment,” Mr Morris said.

“Despite hopes that other industries will make up for the decline in the mining sector, they continue to show a subdued outlook and so are unlikely to offset the loss. Confidence in the construction industry is improving and is now a little above average but manufacturing continues to decline and is below average. The very high profile retail sector is steady but remains below average.”

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Guillermo Troncoso

Guillermo Troncoso

Guillermo is the Editor of Dynamic Business and Manager of film &amp; television entertainment site ScreenRealm.com. Follow him on <a href="https://twitter.com/gtponders">Twitter</a>.

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