The Roy Morgan Business Confidence survey jumped 6.3 points or 5.9% in April after the federal budget but before last week’s interest rate increase.
9 May 2022
The strong result for April came after Treasurer Josh Frydenberg handed down the federal budget at the end of March which included a slashing in the fuel excise by over 20 cents per litre.
However, the rise in business confidence came before the RBA’s decision to raise interest rates this week for the first time in more than a decade following the higher than expected ABS CPI result for the March quarter 2022 showing an annual rate of inflation of 5.1% - the highest in more than 20 years.
There were improvements across the index, and an increasing majority of businesses, 54%, expected ‘good times’ for the Australian economy over the next year while a slim majority, 51.6%, said the next 12 months would be a ‘good time to invest in growing the business’.
On a state-based level, there were monthly increases in WA, up 19 pts (+18.7%), Queensland, up 15.3 pts (+15.5%), NSW, up 6.5 pts (+5.7%) and a small increase in Victoria, up 0.9 pts (+0.8%). The only exception was in SA, in which business confidence plunged 13.5 pts (-12.4%) following the thumping election victory for the ALP, led by new Premier Peter Malinauskas, in late March.
Accommodation & Food Services was clearly the most confident industry in March-April 2022 with business confidence soaring to 151.4, up 30.4 pts (+25.1%) on a year ago.
Accommodation & Food Services was one of only three industries to have higher business confidence now compared to a year ago.
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Other confident industries with business confidence over 10 pts higher than the national average included Wholesale on 128.9, but down 16.3 pts (-11.2%) on a year ago, Agriculture on 124.2, down 20.1 pts (-13.9%) on a year ago, Property & Business Services on 122.5, down 3.4 pts (-2.7%) on a year ago and Administration & Support Services on 122.3, down 9.3 pts (-7%) on a year ago.
There were however several laggards with business confidence well below the neutral level of 100 including Construction on 93.7, down 22.7 pts (-19.5%) on a year ago, Recreation & Personal on 81.8, down 25.9 pts (-24%) on a year ago and Electricity, gas & water on only 55, down 19.6 pts (-26.3%) on a year ago.
The industry to suffer the largest decline in business confidence was Retail at 82.4, down 55.5 pts (-40.2%) on a year ago – the largest percentage fall of any industry compared to early 2021. As concerns about inflation and rising interest rates continue to mount, retailers are facing the prospect of consumers tightening their spending after two years of stimulus-fuelled ‘boom times’.
Mining was one of the industries with the lowest business confidence over the past two months, but nevertheless, it is one of only three industries to improve from a year ago, up 13.1 pts (+16.3%) to 93.0.
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