Roy Morgan Business Confidence jumps 10.4 points to 106.4 in January – highest since April 2022
In January 2023 Roy Morgan Business Confidence was 106.4 (up 10.4pts since December), the largest jump to start a new year since the index began over a decade ago in 2010.
The largest improvements in Business Confidence were driven by increases in optimism about the performance of the Australian economy over the next year and whether the next 12 months would be a good time to invest in growing the business.
The increase to Business Confidence in January came before the RBA’s decision to increase interest rates for a ninth consecutive meeting, up by 0.25% to 3.35% - the highest official interest rates since mid-2012.
The RBA’s decision to increase interest rates followed the highest Australian inflation figures for 32 years for the December quarter 2022 at an annual rate of 7.8%. The multi-decade highs in inflation have now led many to conclude the RBA will continue to raise interest rates – at least for the next two months.
The biggest driver of the increase in Business Confidence related to the performance of the Australian economy over the next year with 49.3% (up 10.1ppts) of businesses expecting ‘good times’, while 45.3% (up 5.9ppts) expect ‘good times’ for the economy over the next five years.
Businesses are increasingly positive about the investment environment with 48.3% (up 8.7ppts) saying the next 12 months will be a ‘good time to invest’ in growing the business.
Business Confidence is now 6.3pts below the long-term average of 112.7 but is a large 28.3pts higher than the latest - ANZ-Roy Morgan Consumer Confidence of 78.1 for February 6 – February 12, 2023.
Roy Morgan Monthly Business Confidence -- Australia
Source: Roy Morgan Business Single Source, Dec 2010-Jan 2023. Average monthly sample over the last 12 months = 1,419.
Business Confidence is highest in Western Australia, but up most in Queensland
For the first time since November 2021 Business Confidence is now higher than a year ago at 106.4 in January 2023, up 4.9pts (+4.9%) from a year ago although it remains a large 14.1pts (-11.7%) below the level of two years ago in January 2021 (120.5).
The index is up from a year ago in four States (Western Australia, Queensland, South Australia and Victoria) but down marginally from a year ago in New South Wales and Tasmania. Business Confidence is clearly highest in Western Australia at 127.5, and up a significant 11.7pts (+10.1%) on a year ago.
However, the largest increase to Business Confidence to start the new year has been in Queensland with the indicator at 106.9, up 14.5pts (+15.6%) from a year ago, and up 25.1pts (+30.7%) from a month ago. This is a surprisingly positive result for the sunshine state as Business Confidence had been below the neutral level of 100 in Queensland every month since last year’s Federal Election.
Despite the broader trend, Business Confidence to start the year is lower in New South Wales at 104.6, down 3pts (-2.7%) from a year ago, and in Tasmania at 105.2, down 10.9pts (-9.4%) from a year ago.
Business Confidence has increased from a year ago in South Australia, up 6pts (+6.1%) to 103.4, and is now marginally in positive territory. Victoria is the only one State with Business Confidence below the neutral level of 100 at only 99.4, although this is up 3.1pts (+3.2%) on a year ago. Business Confidence in Victoria has now been below the neutral level of 100 for four straight months since September 2022.
Business Confidence by State in January 2022 vs January 2023
Source: Roy Morgan Business Single Source, January 2022, n=1,426, January 2023, n=1,454. Base: Australian businesses. *Tasmanian Business Confidence is measured over two months: Dec 2021-Jan 2022 cf. Dec 2022-Jan 2023.
Education & Training, Recreation & personal, Information, Media & Telecommunications and Community services are the most confident industries early in 2023
Over the last two months only four industries, Education & Training, Recreation & personal, Information Media & Telecommunications and Community services had Business Confidence over 10% higher than the national average of 101.2.
The most confident industry was Education & Training with Business Confidence of 123.9, an increase of 35pts (+39.4%) on a year ago. This industry has been amongst the most confident throughout 2022 as the relaxation of pandemic restrictions has re-opened Australia’s borders to tens of thousands of international students who were unable to come to Australia during the pandemic period in 2020-21.
In second place is Recreation & personal with Business Confidence of 118.4, an increase of 27pts (+29.5%) on a year ago, another industry that has clearly benefited from the relaxation of pandemic restrictions during 2022 which had previously prevented many of the more personal services being conducted. Business Confidence in this industry is at its highest since June 2021, just before more than half of Australia was placed into lockdown.
Other confident industries include Information Media & Telecommunications with Business Confidence of 113.2, an increase of 11.8pts (+11.7%) on a year ago just ahead of Community services on 112.0, up 2pts (+1.8%) on a year ago.
The four industries mentioned above are the only industries for which Business Confidence is higher than a year ago and which currently have positive Business Confidence above the neutral level of 100.
There’s a familiar industry at the bottom with Business Confidence lowest of all for Electricity, gas & water at only 56.3 in December 2022 – January 2023. This is well over 40% below the national average of 101.2 and down 23.2pts (-29.2%) on a year ago. Finance & Insurance is another industry with low Business Confidence at only 78.0, down a large 35.3pts (-31.2%) on the same time in 2021-22.
Other industries with low Business Confidence include Agriculture on 90.9, down a large 44.7pts (-33%) on a year ago and Construction on 94.9, which is actually up 8.3pts (+9.6%) on a year ago.
Business Confidence for Top 5 and Bottom 5 Industries in December 2022 – January 2023
Source: Roy Morgan Business Single Source, December 2022 – January 2023, n=2,864. 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 increasingly positive about the performance of the Australian economy and investing the company over the next 12 months:
- In January businesses were increasingly positive about Australia’s economic performance over the next year with 49.3% (up 10.1ppts) expecting ‘good times’ while slightly fewer, 48.2% (down 10.5ppts), expect ‘bad times’;
- Businesses are also more confident about investing in growing their business with 48.3% (up 8.7ppts) saying the next 12 months will be a ‘good time to invest in growing the business’, while 43.7% (down 7.5ppts) said it will be a ‘bad time to invest’ in growing the business;
- However, businesses remain broadly negative on the longer-term outlook for the Australian economy with a majority of 50.6% (down 3.9ppts) expecting ‘bad times’ for the Australian economy over the next five years while 45.3% (up 5.9ppts) expect ‘good times’ over the next five years;
- Businesses remain largely positive about their own prospects for the next year, with 46.7% (down 0.6ppts) expect the business will be ‘better off’ financially this time next year, while around a fifth, 20.8% (down 2.5ppts) expect the business will be ‘worse off’;
- Just over two-fifths of businesses, 40.2% (up 3.9ppts), said their business is ‘better off’ financially than this time a year ago while slightly fewer, 34.2% (down 0.1ppts), said the business is now ‘worse off’.
Michele Levine, CEO of Roy Morgan, says Business Confidence jumped by 10.4pts in January – the largest jump in Business Confidence to start a year since the index began in 2010:
“Roy Morgan Business Confidence jumped for the first time in five years in January, increasing 10.4pts (+10.8%) to 106.4 – its highest level for nearly a year since April 2022 (113.0).
“Business Confidence is now higher than a year ago for the first time since November 2021 and has been drive higher by increasing confidence about the next 12 months in terms of the Australian economy and also whether it’s a ‘good time to invest’ in growing the business.
“Now 49.3% (up 10.1ppts) of businesses say that there will be ‘good times’ economically in Australia over the next 12 months and 48.3% (up 8.7ppts) say that the next 12 months will be a ‘good time to invest’ in growing the business. Both of these indicators are at their highest since April 2022.
“It is worth considering that the Business Confidence figures for January were interviewed prior to the RBA’s decision to raise interest rates for a ninth consecutive meeting in February, up +0.25% to 3.35% – the highest interest rates for over a decade since October 2012. In addition, the RBA is now expected to increase interest rates at each of its next two meetings in March and April.
“On a State level Business Confidence is now in positive territory in five States led by WA (127.5), Queensland (106.9), Tasmania (105.2), NSW (104.6) and SA (103.4). Only in Victoria was Business Confidence below the neutral level of 100 in January at 99.4.
“At an industry level there were five industries flying high in December 2022 – January 2023 with Business Confidence above 110. Leading the pack are Education & Training on 123.9, Recreation & personal on 118.4 and Information Media & Telecommunications on 113.2 – the only three industries to increase Business Confidence by over 10pts compared with the same time a year ago.
“Other industries with high confidence include Community Services on 112.0, Transport, Postal & Warehousing on 110.0, Administration & Support Services on 109.4, Professional, Scientific & Technical Services on 103.6, Property & Business Services on 103.5 and Manufacturing on 103.2.
“In contrast there are two industries for which Business Confidence is lagging more than 20% below the national average including Electricity, gas & water, down a large 23.2pts (-29.2%) on a year ago to 56.3, and Finance & Insurance, down 35.3pts (-31.2%) to 78.0.”
The latest Roy Morgan Business Confidence results for January are based on 1,454 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 |
