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The November rate rise confirmed a record run of pessimism, the latest Roy Morgan index shows.
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Business confidence plummets, two-thirds gloomy about 2024
07 December 2023
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10 minute read
Business confidence plummeted in the wake of the November interest rate rise to its lowest level in three years and almost two-thirds of companies are pessimistic about the economy, the latest Roy Morgan survey reveals.
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It also showed 64 per cent of enterprises were concerned that the economy was heading for “bad times” in 2024 while 61 per cent expected that to last five years.
Roy Morgan’s Business Confidence index, which dropped 4.6 points to 85.8 in November, has now spent a record 10 consecutive months below the neutral level of 100, its longest negative run for more than a decade.
It has slipped below its level of a year ago and sits 25.5 points below the long-term average of 111.3.
Roy Morgan CEO Michele Levine said the RBA’s November rate increase to 4.35 per cent had suppressed confidence across the country, with Western Australia at a three-year low and big falls in NSW and South Australia.
The outlook in many sectors – especially construction and retail – was also looking bleak.
“The challenging conditions for the retail industry are well known with persistent inflation and the highest interest rates for 12 years crimping consumers ability to spend up big,” she said.
“These factors mean the retail industry continues to have clearly the lowest business confidence at only 67.6 – the only industry with a confidence rating below 70.”
She said retail forecasts for spending in the run-up to Christmas of $78.4 billion were an increase of just 0.8 per cent on last year and well below the level of inflation.
Other industries low on confidence included agriculture (72.8 points), mining (72.3) and construction (71.2).
However, there were pockets of optimism with more businesses – almost four in 10 – relatively positive about their prospects for next year outweighing nearly one in three expecting to be worse off.
“At an industry level it is administration and support services which is again the most confident industry,” Ms Levine said, with information media and telecommunications and electricity, gas and water also well above average.
Among the states, Queensland was the exception with a substantial increase in business confidence to 86.4 points.
Overall, just 29 per cent of businesses said they were better off financially than a year ago and 46 per cent said they were worse off.
Despite this, 42 per cent thought next year would be a good time to invest only slightly outweighed by the 50 per cent which believed it would be a bad time.
The latest Roy Morgan Business Confidence results for November are based on 1,519 detailed interviews with a cross-section of businesses.
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