Business confidence dips after post-election highs

17 January 2014

Business confidence had a sharper than expected drop in December 2013, falling to 125.2 after reaching a post-election high of 136.3 in October, Roy Morgan Research has indicated.

While the drop was expected after the election, many other negative factors have also contributed to a steeper fall than was expected.

This includes a more pessimistic view on where the economy is heading in the next 12 months and the next five years.

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The December figures were compiled through 1,841 interviews across all industries, business sizes and locations across Australia.

"The December fall in confidence was impacted by a number of major negative factors including Holden announcing it was closing its Australian manufacturing plant at the end of 2017, large-scale retrenchments at Qantas and a $47 billion deficit presented by Treasurer Joe Hockey in the Mid-Year Economic and Fiscal Outlook," industry communications director at Roy Morgan Research Norman Morris said.

Morris added the ASX200 declined by five percentage points during the first half of December, and reflected the pessimism around Australia's economy. Although it recovered in the second half, it still revealed the uncertainty in the market.

Micro business saw a fall in business confidence in December, down 6.1 points to 123.3 while small business was down six points to 137.3.

On the other hand medium/large businesses remained the most confident over the last three years in December, staying at a historically high level and miles ahead of the others.

It remained steady, going up 0.2 points to 147.1.

Of the major industries mining remains in the lead in December with 160.7, up from 149.7 in November. Agriculture is well below average with 119.4, marginally lower than 121.9 recorded in November.

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