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Post-budget business confidence holds, but nevertheless poor

Australian business confidence continues to stay around the level it hit following the Government Budget unveiled in May, yet it still remains below the five-year average of 117.2.

The latest figures released from Roy Morgan Research’s Business Confidence report revealed a 114.8 result in June, which follows a jump of 9.6 points to 114.7 in May. Business confidence is holding steady, but is still quite poor compared to the five-year average of 117.2 and the peak of 136.3 registered in October 2013.

The tax write-offs introduced in the Budget was cited a key factor in business confidence holding its level, yet the economic difficulties seen overseas and poor employment numbers at home continue to hold it down.

“Business confidence in June remained reasonably positive due to the combination of low interest rates and the immediate tax write-offs for expenditure up to $20,000,” Roy Morgan Research Industry Communications Director Norman Morris said.

“However, these June results were taken prior to the deteriorating position and impasse in Greece, the dramatic downturn in the Chinese share market, and the resultant further drop in the iron ore price. Other major economic headwinds also continue to blow, with a worsening budget deficit and the fact that over two million Australians are either unemployed or underemployed.”

While business confidence remains fragile in the midst of unstable elements, the next year may see more businesses investing. 59 per cent of Australian businesses said they believe the next 12 months is a period in which to invest in pushing their business to grow, a result 3 per cent above the five-year average.

“The ANZ-Roy Morgan Australian Consumer Confidence for the first week in July gives a strong indication that the Greek situation and the Chinese share-market decline are likely to keep business confidence volatile for some time yet,” Mr Morris said.

“Despite hopes that other industries will make up for a declining mining sector, a number of key industries remain below average in confidence. These include agriculture, manufacturing, accommodation and food services, health care and personal services. The industries showing above-average confidence include finance and insurance, rental and real estate, and the wholesale trade. The all-important construction industry remains around average and is not showing any real sign of improvement.”

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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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