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Business Confidence jumps in September – up 5.8% to 114.9 after Government passes middle-income tax cuts and ‘Omnibus’ Bill with $6.3 billion Budget savings

Source: Roy Morgan Business Single Source (Australia), December 2010-September 2016. Average monthly sample last 12 months = 1,022.

Roy Morgan Research’s Business Confidence rose 5.8% to 114.9 in September. The rise in Business Confidence comes after the Turnbull Government passed the middle-income tax cuts and the ‘Omnibus’ Bill with $6.3 billion in Budget savings. The large rise in Business Confidence occurred even though the Australian All Ordinaries was virtually unchanged in September – the All Ordinaries ended September at 5,525 (down only 4pts from August 31, 2016). After the first two weeks of October the All Ordinaries is still little changed at 5,521.

The rise in Business Confidence in September was broad based across all five Business Confidence indicators and means Business Confidence is now just below the 6yr average of 116.6.

Net expectations of business performance over the next 12 months have risen to 21.3pts (up 4.1pts in September) and net views of whether the next 12 months will be a ‘good/bad time to invest’ are now 14.4pts (up 7.4pts in September). Roy Morgan September Business Confidence results are based on 1,049 interviews with a cross section of businesses across Australia.

Monthly Business Confidence -- Australia

Roy Morgan Business Confidence - September 2016 - 114.9

Source: Roy Morgan Business Single Source (Australia), December 2010-September 2016. Average monthly sample last 12 months = 1,022.

The rise in Business Confidence in September was mainly due to increased confidence about the year ahead. Now 41.3% (up 4ppts) of businesses say they expect their business to be better off financially this time next year than they are now while 20% (down 0.1ppts) believe they will be worse off. In addition 54.3% (up 5.8ppts) say the next 12 months is a ‘good time’ to invest in growing the business while 39.9% (down 1.6ppts) say it is a ‘bad time’.

The rise in Business Confidence in September was matched by a small rise in ANZ-Roy Morgan Consumer Confidence in September – ending the month at 120.6 (September 24/25, 2016), up 2.2pts from the weekend of August 27/28, 2016 (118.4). However, Consumer Confidence has fallen back slightly in early October to 117.5 (October 8/9, 2016).

Michele Levine, Chief Executive Officer, Roy Morgan Research says:

“Business Confidence increased by 6.3pts (+5.8%) in September to 114.9, recovering from a near 12-month low in August. Despite the closer than expected Federal Election result the Turnbull Government has proven it can ‘get things done’ in the new Parliament – passing a comprehensive ‘Omnibus’ Bill through Parliament in September that secured $6.3 billion in budget savings over the next four years with the help of the Labor Opposition.

“This clear demonstration of effective leadership by Turnbull early in the term of the new Parliament suggests this Government will be more effective than many had thought in the immediate aftermath of the Federal Election. Alongside the Budget savings measures the Government also passed a tax cut for an estimated half a million middle income Australians.

“The next major focus for the Government is passing the significant business tax cuts that the Government took to the recent Federal Election. The Government has pledged to reduce the corporate tax rate for large businesses to 25% (from the current 30%) over the next decade. In a sign that businesses believe the Government will be able to pass this legislation, now 54.3% (up 5.8ppts) of businesses now say the next 12 months will be a ‘good time to invest’ in growing the business.

“A successful negotiation to legislate for these tax cuts will provide an important stimulus for the Australian economy dealing with several economic headwinds over the next few years – including the shuttering of the Australian automotive manufacturing industry in 12 months’ time when both Holden and Toyota cease manufacturing cars in Australia.

“Analysing the movements in Business Confidence around the States shows Business Confidence increased in all States except Queensland which experienced a slight drop. The ‘Apple Isle’ of Tasmania continues to have clearly the highest Business Confidence in the nation while the resource rich State of Western Australia continues to lag the rest of the nation with the lowest Business Confidence.”


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Norman Morris
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Norman.Morris@roymorgan.com