RBA assistant governor Christopher Kent says labour market softening faster than forecast
Australian businesses have lost faith in the economy, with a record three in four bracing for five years of tough times and growing numbers baulking at investing in their own expansion.
Australian businesses have lost faith in the economy, with a record three in four bracing for five years of tough times and growing numbers baulking at investing in their own expansion.
Roy Morgan’s latest survey found business confidence fell to 76.5 in September, barely above July’s record low of 76 and marking an unprecedented sixth consecutive month below 80.
Almost half of businesses now reckon the next 12 months will be a bad time to invest in growth, while just 26.9 per cent believe the conditions are right to expand.
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By continuing you agree to our Terms and Privacy Policy.Roy Morgan chief executive Michele Levine warned that stubborn inflation and higher oil prices from the Iran war were adding to the threat of further interest rate rises.
“The ongoing Iran War — now into its eighth month — is continuing to pressure oil prices, and thereby inflation,” Ms Levine said.
The bleak survey results followed the Reserve Bank’s September decision to lift interest rates to 4.6 per cent, their highest level in 15 years, with annual inflation running at 4 per cent.
Business confidence has tumbled 25.1 points over the past year. A record 76.3 per cent of businesses expect bad economic conditions over the next five years, compared with just 18.3 per cent banking on better times.
More businesses now expect to go backwards than get ahead, with 36.1 per cent bracing for a deterioration in their finances over the next year against just 30.3 per cent banking on an improvement.
The mining industry has been hammered. Confidence crashed 63.4 points over the year to just 48.3, the lowest reading of all 18 industries surveyed.
The figures, measured over the three months to September, make grim reading for other major sectors, too.
Confidence in financial and insurance services plunged 41 points to 67.5, while property-related businesses suffered a 42.6-point fall to 66.8.
Just three industries managed to keep their heads above water, with public administration, education and arts and recreation the only sectors recording positive confidence readings.
Among the states, WA copped the biggest annual fall in the country, with confidence diving 46.3 points to 70.9. South Australian businesses were the most downbeat, recording the nation’s lowest reading of 65.1.
Victoria suffered the biggest monthly battering, shedding 20 points to 72.4 and wiping out a brief rebound following the change of premier from Jacinta Allan to Ben Carroll.
Even NSW, the country’s most confident State, could muster only 83.2, well short of the neutral mark of 100.
Despite the pessimism, businesses may have some cause for relief after weaker-than-expected jobs figures last week prompted financial markets to slash bets on yet another rate rise.
Futures trading now implies just an 18 per cent chance of an increase, down from 44 per cent in late September.
