According to the Roy Morgan Monthly Business Confidence index, business confidence in March was down by 9.1 per cent to 95.1 — a new record low, more than 4 points below the previous bottom of 99.8 the decade-old index hit in July 2011.
Analysing business confidence by dividing March into fortnights revealed a tale of two distinct halves. In the first two weeks of the month, the index continued its recovery from the summer bushfires and averaged 107.5, an increase of 2.9 points from February.
However, this recovery was halted in mid-March, with the index averaging only 71.4 over the last half of the month. Subsequently, it plunged day by day for the remainder of March as the coronavirus pandemic hit Australia and prompted increasing government restrictions to slow the spread.
“Roy Morgan Business Confidence ‘hit the wall’ in mid-March and the growing recovery from the summer bushfires is now a distant memory, as Australia deals with the strict social distancing and self-isolation directives of federal and state governments to halt the spread of the COVID-19 coronavirus,” said Michele Levine, CEO of Roy Morgan.
Business confidence was down significantly for industries almost across the board, with recreation and personal services, retail, and finance and insurance raking in the biggest declines on the back of new social distancing and self-isolation directives.
While recreation and personal services suffered a 41 per cent drop and retail 25 per cent, transport saw a confidence boost of 24 per cent.
Looking at state-by-state data, while business confidence was shattered across all six states, Tasmania led the charge with a 26 per cent drop.
The ACT followed with a decline of 16 per cent, Victoria with 13 per cent and South Australia stood at 12 per cent.
Despite a positive start to the month for the other states, the index fell by 9 per cent in NSW, 4 per cent in Queensland and 2 per cent in Western Australia for the month as a whole.
Grim outlook for next year
Views about the Australian economy’s performance over the next year have deteriorated significantly in March as the impact from COVID-19 has grown.
Despite the government’s numerous stimulus packages, only 30.3 per cent of businesses said they’re expecting the Australian economy to have “good times” economically over the next year, while 62.7 per cent expect only “bad times”.
Furthermore, 46.1 per cent also said they expect “bad times” for the Australian economy over the next five years.
Ms Levine explained that while the JobKeeper scheme was announced following the collection of March data, the government’s previous packages did fail to spur confidence.
“The April results will be keenly watched to gauge whether this third stimulus package has stemmed the declines seen throughout the second half of March. The previous two stimulus packages in March fell short and had negligible impacts on business confidence,” Ms Levine said.
Consumers more confident
Roy Morgan’s weekly consumer confidence survey did reveal, however, that nearly two-thirds of Australians now say the government is handling COVID-19 well, up by a large 22 per cent in a week.
In publishing the findings of its web survey of 987 Aussies, conducted over the weekend of 4 to 5 April, Roy Morgan said consumer confidence has jumped by 10.1 per cent to 71.9.
“The 10.1 per cent jump in confidence recorded in this survey was the biggest since it became a weekly survey in 2008. We think it represents a strong endorsement of the government’s massive wage subsidy package, announced on 30 March,” said ANZ head of Australian economics David Plank.
“The bounce needs to be kept in perspective — confidence is still around the lows seen in 1990 during the last recession. So, consumers can hardly be said to be cheerful or ready to spend. But it is nice to be commenting on some better news.”