Economy dampens business confidence

The initial boost in business confidence buoyed by the appointment of Malcolm Turnbull as Prime Minister has worn off, with confidence declining by 3.4 per cent in January, following a December decline of 3.5 per cent.

Roy Morgan Research's Business Confidence figures showed confidence had declined 3.9 points in January to 110.6 on the back of the negative local and international economic environment, which saw the Australian Securities Exchange slide by 8.6 per cent in the first three weeks of January.

Despite the decline in confidence over the last three months, it was still 7.8 per cent above levels before the appointment of Turnbull.

The decline was a sign that negative economic events easily affected business confidence, with confidence levels now below the five year average of 116.8.

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Industry communications director, Norman Morris, said ongoing coverage of the slowdown in Chinese growth, the drastic decrease of oil prices and other commodities, and the worsening budgetary situation in Australia have all affected the ASIX and business sentiment.

"With business confidence declining, it remains a challenge for both the state and federal governments to create a positive environment and plan that will encourage business growth against what is likely to remain a volatile international economic environment," Morris said.

Only 52 per cent of businesses now believed Australia would see better economic conditions over the coming year, down from the five year average of 60.2 per cent.

But 60 per cent of businesses said the next 12 months would be good time to expand their business, which was higher than the five year average of 56.4 per cent.