Local businesses remain mostly positive about the state of the economy, despite the fact a sentiment survey registered its first decrease in business confidence in six months.
The Roy Morgan Monthly Business Confidence Survey found business confidence slipped last month, falling from 118.7 in January to 116.6 in February, but despite this dip business owners still have a mostly positive outlook towards economic conditions.
According to the survey, a contributing factor to the confidence spike over the past six months was the increase in the proportion of businesses who believe Australia will have good economic conditions in the next 12 months – which rose from 43 percent in July to 61 percent in January, before declining to 59 percent in February. The continued positive outlook held by business owners towards the economy is impacting favourably on investment decisions, with 56 percent now considering the next 12 months as a good time to invest in growing the business.
Roy Morgan industry communications director Norman Morris believes that although business confidence remains positive nation-wide, some major differences exist between various industries.
“Australian businesses are not seeing their outlook as the much quoted ‘two-speed economy’ but rather are ‘multi-speed’ in their confidence,” he said.
Morris noted businesses in the mining and finance industries have the most positive outlook, followed by businesses in the health care and social work sectors. Retail and construction had the least positive outlook, but Morris said “even those two groups on balance are positive.”
Morris also noted business size as a major contributing factor to confidence, as well as location and industry.
“With the medium and large businesses being the more confident and the micro businesses, with a turnover of less than a million dollars per year, being the least confident,” he said.
As micro businesses account for around 90 percent of businesses in Australia, any assistance such as tax relief or drop in interest rates would have a major overall impact on business sentiment, Morris added.