Roy Morgan Business Confidence up for a second straight month and back in positive territory at 100.7
In September 2022 Roy Morgan Business Confidence was 100.7 (up 4.7pts since August), the first time the index has increased in consecutive months so far this year.
The index is now back in positive territory and at its highest since April 2022 before the RBA started raising interest rates in early May. Since then, the RBA has raised interest rates for six straight months by a total of 2.5% and the official cash rate is now at 2.6%. This is the RBA’s fastest set of increases to interest rates since the RBA raised rates by 2.75% in only five months in 1994.
There were increases across the index in September with businesses growing more confident about their own circumstances as well as about the prospects for the Australian economy in the period ahead.
The biggest drivers of the positive movement in Business Confidence were the increasing number of businesses, 43.6% (up 3.8ppts), expecting ‘good times’ for the economy over the next year, and increasing plurality of businesses, 39.7% (up 2.5ppts) that say they are ‘better off’ now financially than a year ago.
Business Confidence is now 12.5pts below the long-term average of 113.2 but is significantly higher than the latest - ANZ-Roy Morgan Consumer Confidence of 85.5 for September 26 – October 2, 2022.
Roy Morgan Monthly Business Confidence -- Australia
Source: Roy Morgan Business Single Source, Dec 2010-Sep 2022. Average monthly sample over the last 12 months = 1,437.
Business Confidence is down from a year ago in all States except NSW and Victoria
Business Confidence in September is down by 3.9pts (-3.7%) from a year ago to 100.7 but is 15.1pts higher than two years ago in September 2020 (85.6) during Victoria’s second wave of COVID-19.
The index is down in all States except NSW and Victoria which were both in the middle of extended lockdowns a year ago. Business Confidence is now highest in these two States and was up 4.2pts (+4%) to 108.9 in NSW and was up by 13.6pts (+14.4%) to 108.5 in Victoria.
The only other State with a positive Business Confidence above the neutral level of 100 is Tasmania at 104.1, although this represents a decline of 12.1pts (-10.5%) on a year ago.
Business Confidence is down from a year ago and under the neutral level of 100 in the other three States. Clearly the largest fall was in Western Australia, down 42.8pts (-31.6%) to 92.6. There were also falls in South Australia, down 6.9pts (-6.9%) to 93.0, and Queensland, down 22.5pts (-22.0%) to 79.8.
Business Confidence by State in September 2021 vs September 2022
Source: Roy Morgan Business Single Source, September 2021, n=1,417, September 2022, n=1,359. Base: Australian businesses. *Tasmanian Business Confidence is measured over two months: Aug-Sep 2021 cf. Aug-Sep 2022.
Education & Training, Accommodation & Food Services, Mining, Property & Business Services are the most confident industries in the last two months
The Education & Training industry was by far the most confident in August-September 2022 with Business Confidence 30% higher than the national average at 127.9. This represents a significant increase of 27.1pts (+27%) on a year ago when the flow of international students into the country was heavily constrained by Australia’s closed international borders.
Accommodation & Food Services was the second most confident industry with Business Confidence almost 20% higher than the national average at 116.1. This figure is 9.5pts (+8.9%) higher than a year ago and continues the strong results seen for this industry during 2022 as travel restrictions around Australia were removed and people were finally able to take long-delayed holidays.
The star performer over the last year has been the Mining industry which now has Business Confidence of 112.3, an increase of 58.6pts (+109%) on a year ago. This is clearly the largest increase of any industry over the last year and is not surprising when one considers Australia has enjoyed a series of record high trade surpluses. The most recent data available shows Australia with a monthly trade surplus of $8.7 billion in July 2022 built largely on resource exports of coal, gas and iron ore.
These three industries are among only seven with Business Confidence higher than the neutral level of 100 in August-September 2022.
Other industries with Business Confidence in positive territory include Property & Business Services on 109.9, up 2.4pts (+2.2%) on a year ago, Professional, Scientific & Technical Services on 104.6, up 6.7pts (+6.8%) on a year ago, Administrative & Support Services on 103.1, down 9.1pts (-8.1%) on a year ago and Manufacturing on 101.4, up 11.7pts (+13%) on a year ago.
Finance & Insurance has easily the lowest Business Confidence in August-September 2022 at only 69.4, almost 30% below the national average of 98.4, and down 14.1pts (-16.9%) on a year ago.
Other industries with far lower than average Business Confidence include Public Administration & Defence on 85.0, down 57.4pts (-40.3%) on a year ago, Electricity, gas & water on 85.0, up 12.9pts (+17.9%) on a year ago and Retail on 87.6, down 28.1pts (-24.3%) on a year ago.
Business Confidence for Top 5 and Bottom 5 Industries in August – September 2022
Source: Roy Morgan Business Single Source, August-September 2022, n=2,757. Base: Australian businesses. Note: In the chart above green bars represent Business Confidence in positive territory above the national average and red bars represent Business Confidence well below the national average and below the neutral level of 100.
Businesses are positive about their own prospects but a majority expect ‘bad times’ for the Australian economy’s performance over the next year and next five years
- An increasing plurality of businesses, 39.7% (up 2.5ppts), said the business is ‘better off’ financially than this time a year ago while just over a third, 34% (down 2.8ppts), said the business is ‘worse off’;
- Businesses are increasingly positive about their own prospects for the next year with 44.4% (up 0.9ppts) of businesses, expecting the business will be ‘better off’ financially this time next year, while under a quarter, 24.5% (down 2.4ppts) expect the business will be ‘worse off’;
- However, a declining majority of businesses, 54.2% (down 4.1ppts) expect ‘bad times’ for Australia’s economic performance over the next year while under half, 43.6% (up 3.8ppts), expect ‘good times’;
- Businesses are also generally negative on the longer-term outlook for the Australian economy with 42.1% (up 0.9ppts) of businesses expecting ‘good times’ for the Australian economy over the next five years while a slim majority of 51.7% (down 1.9ppts) expect ‘bad times’ over the next five years;
- Businesses are split on whether to invest in growing their business with 44.8% (up 1.3ppts) saying the next 12 months will be a ‘good time to invest in growing the business’,while a slim plurality of 46.6% (down 2.8ppts) said it will be a ‘bad time to invest’ in growing the business.
Michele Levine, CEO of Roy Morgan, says Business Confidence was up for the second straight month in September to its highest point since the RBA began to increase interest rates in May:
“Roy Morgan Business Confidence increased by 4.7pts to 100.7 in September to reach its highest level since April 2022 (113.0) – before the RBA began to raise interest rates for the first time in over a decade.
“Since the higher than expected ABS CPI reading in late April (an annual rate of 5.1% in the year to March 2022) the RBA has raised interest rates for six straight months by a total of 2.5% and the official cash rate now sits at 2.6% – the highest since August 2013. This is the fastest increase in interest rates for nearly 30 years since late 1994 when the RBA hiked interest rates by 2.75% in only five months.
“Interestingly, Business Confidence is now highest in the two States that were locked down for extended periods a year ago – NSW and Victoria. The two largest States now have Business Confidence well above the national average at 108.9 in NSW and 108.5 in Victoria compared to 100.7 nationally.
“In the three other mainland States the indicator is lagging and is down significantly on a year ago at only 93 in South Australia, 92.6 in Western Australia and just 79.8 in Queensland. The ‘good news’ for the national economy is that the two largest states of NSW and Victoria comprise over 57% of the national economy and clearly provide the bulk of economic activity.
“At an industry level it is the same industries flying high in August-September 2022 that have been performing well above average over the last few months. Education & Training remains the most confident industry at 127.9 – nearly 30% above the national average as the end of pandemic restrictions this year has allowed international students to return to Australia in big numbers.
“Accommodation & Food Services is at 116.1, almost 20% higher than the national average, and has also been a huge beneficiary of the relaxation of pandemic restrictions as Australians who have had to defer travel plans for two years have finally been able to move around the country freely again. Many holiday spots have reported record results in recent weeks, including the owner of key Australia’s ski resorts at Perisher, Mt. Hotham and Falls Creek – the US owned Vail Resorts.
“The other big winner has been the Mining industry which now has a rating of 112.3, following a stunning increase of 58.6pts (+109%) on a year ago. Resource companies have benefited from increased demand for energy products in the wake of Russia’s invasion of Ukraine as well as the rebounding world economy as countries have re-opened this year. Australia’s trade surplus hit a record high of $17.7 billion in June based largely on booming resource exports of gas, coal and iron ore.
“In contrast there are four industries for which Business Confidence is lagging more than 10% below the national average including Finance & Insurance, down 14.1pts (-16.9%) to 69.4, Public Administration & Defence, down a large 57.4pts (-40.3%) to 85.0, Electricity, gas & water, up 12.9pts (+17.9%) to 85.0 and Retail, down 28.1pts (-24.3%) to 87.6 despite record monthly retail sales continuing.”
The latest Roy Morgan Business Confidence results for September are based on 1,359 detailed interviews with a cross-section of Australian businesses from each State and Territory. Detailed findings are available to purchase on a monthly or annual subscription as part of the Roy Morgan Business Confidence Report.
For comments or more information please contact:
Michele Levine
CEO, Roy Morgan
Office: +61 (3) 9224 5215
Mobile: 0411 129 093
To learn more about Roy Morgan’s Business Confidence, Consumer Confidence and Inflation Expectations data call (+61) (3) 9224 5309 or email askroymorgan@roymorgan.com.
About Roy Morgan
Roy Morgan is Australia’s largest independent Australian research company, with offices in each state, as well as in the U.S. and U.K. A full-service research organisation, Roy Morgan has over 80 years’ experience collecting objective, independent information on consumers.
Margin of Error
The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.
| Sample Size | Percentage Estimate |
| 40% – 60% | 25% or 75% | 10% or 90% | 5% or 95% | |
| 1,000 | ±3.0 | ±2.7 | ±1.9 | ±1.3 |
| 5,000 | ±1.4 | ±1.2 | ±0.8 | ±0.6 |
| 7,500 | ±1.1 | ±1.0 | ±0.7 | ±0.5 |
| 10,000 | ±1.0 | ±0.9 | ±0.6 | ±0.4 |
| 20,000 | ±0.7 | ±0.6 | ±0.4 | ±0.3 |
| 50,000 | ±0.4 | ±0.4 | ±0.3 | ±0.2 |
