Larger companies driving business confidence

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Business confidence, as measured by Roy Morgan, has begun 2018 at its best two-month level since 2014 – driven largely by businesses with an annual turnover of $5 million or more.

The Roy Morgan Business Confidence index was down 3.5 points (2.8 per cent) to 120 in February following the usual seasonal trends that show a dip in business confidence usually follows a new year high.

A clear majority of businesses surveyed, 56.1 per cent (up 0.8 points), say now is a “good time to invest” in growing the business. In addition, most businesses in February retained a positive viewpoint on the Australian economy, with 55.8 per cent (down 0.3 points) expecting “good times” for Australia over the next five years and 53.3 per cent (down six points) expecting this over the next 12 months

Roy Morgan CEO Michele Levine says medium and large businesses are driving the strong start to 2018.

“Business confidence for medium and large businesses has increased a stunning 32.1 points to 153.2 for the combined opening months of 2018 compared with a year ago, while small businesses are virtually unchanged on a year ago on 130.6, and micro businesses are on 119.7 – up 7.6 points on a year ago,” she said.

According to Roy Morgan, the February decline in business confidence is driven by decline in confidence about the next 12 months.

Now 43.5 per cent (down 9.3 points) say the business will be “better off” financially this time next year compared with 17.1 per cent (down 1.1 points) expecting the business to be “worse off” this time next year – a net negative movement of 8.2 points.

Surveyed businesses are also less confident about the performance of the Australian economy over the next year with 53.3 per cent (down six points) now expecting “good times” for the Australian economy, while 36.1 per cent (down seven points) expect “bad times”.

Fewer businesses are confident about their own performance, with 41.8 per cent (down 2.9 points) saying the business is “better off” financially than this time last year compared with 26.3 per cent (down 0.4 points) that say the business is “worse off”.

However, an increasing majority of businesses, 56.1 per cent (up 0.8 points) are positive that the next 12 months will be a “good time to invest in growing the business”, much higher than the 33 per cent (down 0.3 points) that say it will be a “bad time to invest”.

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