Businesses are feeling increasingly confident heading into the new year according to Roy Morgan Research’s latest poll.
Business confidence lifted by 0.4% to 116.7 in November – just above the six-year average of 116.6.
“This is the highest Business Confidence has been since the Federal Election in July when the Turnbull Government was returned with a majority of only one seat,” says Michele Levine, CEO of Roy Morgan Research.
The rise in confidence was driven by a sharp increase in Queensland, where confidence is higher than the national average, while there was a small improvement in Victoria. The survey reveals Tasmania has the highest business confidence of any state.
“In contrast business confidence is virtually unchanged in New South Wales and is down significantly in the mining state of Western Australia – now clearly the lowest of any state,” notes Levine.
“Business confidence in South Australia also fell for the second straight month following the state’s widespread blackout in late September and is now in line with the national average.”
The survey of 950 businesses across Australia also reveals expectations of business performance over the next 12 months lifted by 10.3 points to 30.3 points last month.
According to the survey the most confident industries last month were the retail trade industry; accommodation and food services; and public administration, safety and security – which were all 10% higher the national average.
“In contrast, several industries were well below the national average including electricity, gas, water and waste – which has been hit by the power problems in South Australia and also the impending closure of ‘legacy’ power stations like Hazelwood in Victoria; transport, postal and warehousing and wholesale trade which both dropped in November,” says Levine.
As for future business confidence readings, Levine raises possible implications of President Trump’s election in the US, including his negative stance towards trade deals.
“Trump’s stance on US free-trade ‘deals’ will be particularly important to the Australian economy which has benefited from free-trade agreements with important trading partners like China, Japan and South Korea,” she says.
“If Trump increases trade barriers with important Australian trading partners this will obviously impact on Australian business confidence, which so far has been steady since the Trump victory,” Levine concludes.