Business confidence weakens

10 December 2013

Australian business confidence showed signs of weakening across all states in November following strong gains in the months after the Federal election, according to the latest Roy Morgan Research's latest Business Confidence survey.

The survey reveals the November business confidence level result of 131.1. Despite this figure being well above the average of the last three years, it reflects a decline from the October figure of 136.3 and the September results of 134.3.

The drop in confidence among business in November was caused by a decline in positive feelings about where the economy is heading in the next 12 months and the next five years. There has also been a small drop in the proportion of businesses.

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Roy Morgan Research industry communications director Norman Morris said: "The decline in business confidence in November, following the highs in the previous two months created by the Federal election, was probably to be expected to some extent as market realities hit, but a number of events have combined to increase this uncertainty."

According to Mr Morris, the factors most likely impacting the November result were the extensive press coverage of the budgetary situation and the need to lift the debt ceiling by $200 billions, which appears to have been a complete turn-around from the picture that was presented prior to the election.

Other events likely contributing to a more negative outlook for business included the spying controversy regarding Indonesia, problems in the car manufacturing industry and forecasts that the growth in the Australian economy was slowing.

The decline in the financial markets also contributed to weakening business sentiment. "During November the ASX 200 declined by 2 percentage points, which was obviously a reflection of some negative feelings regarding the Australian economy," Mr Morris said.

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