Roy Morgan Business Confidence virtually unchanged in May as Federal Budget fails to provide a confidence boost
In May 2023 Roy Morgan Business Confidence was 90.3 (up 0.1pts since April). The Business Confidence survey was conducted after Treasurer Jim Chalmers delivered the Albanese Government’s first Federal Budget in early May, but before the RBA raised interest rates by +0.25% to 4.1%. Official interest rates are now at their highest for over a decade since May 2012.
The RBA’s latest increase came after the ABS released April 2023 CPI figures which showed annual inflation in Australia at 6.8% - an unexpected increase from 6.3% in the year to March 2023.
Business Confidence has now spent four consecutive months below the neutral level of 100, the longest stretch in negative territory since October 2020 during the first year of the COVID-19 pandemic.
Businesses are still broadly positive about their own prospects over the next year with 40.2% (up 1.5ppts) of businesses that expect the business will be ‘better off’ financially this time next year while around a quarter, 25.1% (down 2.6ppts), expect to be ‘worse off’ financially in a year’s time.
In contrast, businesses are most worried about the performance of the Australian economy over the next five years with 62.0% expecting ‘bad times’ for the economy over the next year and only 34.5% expecting ‘good times’ – a net negative of 27.5% points in May.
Business Confidence is now 21.9pts below the long-term average of 112.2 but still 14.5pts higher than the latest - ANZ-Roy Morgan Consumer Confidence of 75.8 for May 29 – June 4, 2023.
Roy Morgan Monthly Business Confidence - Australia
Business Confidence is highest in Western Australia and lowest in Victoria in mid-2023
Business Confidence was virtually unchanged in May despite the Albanese Government’s first Federal Budget but held its ground as the RBA raised interest rates again early in May to a decade high. However, compared to a year ago, Business Confidence is down 9.9pts (-9.9%).
There are two exceptions to this broader down-trend over the last year led by Western Australia where Business Confidence was up by a large 32.3pts (+31.7%) on a year ago to 134.3, and in Tasmania with Business Confidence at 92.4, up 7.3pts (+8.5%) on a year ago.
The ongoing commodities boom – and especially exports of iron ore and gas which are heavily concentrated in Western Australia – have clearly given the State a large boost over the last year that other States have not enjoyed. Although Business Confidence in Tasmania has improved from a year ago, it is still significantly below the neutral level of 100 in the ‘Apple Isle’.
Business Confidence in New South Wales has held up fairly well from a year ago and is down only 0.7pts (-0.7%) from a year ago at 95.9 – and still above the national average in Australia’s largest State.
In the three other States Business Confidence is down on a year ago and below the national average. In Queensland Business Confidence is down 11.2pts (-11.2%) from a year ago to 89.1 and in South Australia the measure is down a large 12.9pts (-13.5%) from a year ago to 82.6.
Business Confidence is now lowest in the country in Victoria at only 74.0, down 35.2pts (-32.2%) from a year ago. This is the lowest rating for Business Confidence in the State since the Victoria’s second COVID-19 related lockdown began in July 2020 (73.9).
Business Confidence by State in May 2022 vs May 2023
Education & Training and Information Media & Telecommunications are the most confident industries
Over the last two months only four industries, Education & Training, Information Media & Telecommunications, Finance & Insurance and Accommodation & Food Services had Business Confidence over 15% higher than the national average of 90.2.
The most confident industry was again Education & Training with Business Confidence of 122.8, an increase of 18pts (+17.2%) on a year ago. This industry was the only one to experience an increase in Business Confidence over the last year and to have a positive level of Business Confidence above the neutral level of 100.
The reasons for this soaring Business Confidence are well known as the industry has been perhaps the biggest beneficiary of the relaxation of pandemic restrictions during 2022-23 which led to a re-opening of Australia’s borders and the return of tens of thousands of international students to Australia.
Another industry with high Business Confidence is Information Media & Telecommunications, although this is down 12.7pts (-9.9%) from a year ago, the industry is still more than 25% more confident than the national average.
In third place is Finance & Insurance on 106.5, down 6.1pts (-5.4%) on a year ago just ahead of Accommodation & Food Services on 106.1, down 25.4pts (-19.3%) on a year ago and the Mining industry just in positive territory on 100.1, but down 1.8pts (-1.8%) on a year ago.
There’s a familiar industry at the bottom with Business Confidence lowest of all for Electricity, gas & water on only 36.6 during April and May 2023, and down 48.8pts (-57.2%) on a year ago.
Other industries with low Business Confidence include Agriculture on 73.9, down 52.2pts (-41.4%) on a year ago – the largest fall of any industry and Manufacturing on 81.1, down 27pts (-25%) on a year ago.
Business Confidence for Top 5 and Bottom 5 Industries in April – May 2023
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.
Business Confidence virtually unchanged in May as investing sentiment improves but more businesses expect bad times for the Australian economy going forward:
- Views on whether now is a ‘good or bad time to invest in growing the business’ improved with 46.3% (up 5.8ppts) saying the next 12 months will be a ‘good time to invest’ in growing the business and 47% (down 4.7ppts) who say the next 12 months will be a ‘bad time to invest’;
- In May businesses were on balance slightly more negative about Australia’s economic performance over the next year with a majority of 61.2% (up 1.1ppts) expecting ‘bad times’ while only 38% (up 0.6ppts), expect ‘good times’;
- Businesses were also more negative on the longer-term outlook for the Australian economy with an increasing majority of 62% (up 4.9ppts) expecting ‘bad times’ for the Australian economy over the next five years (a new record high figure for this indicator) while only around a third, 34.5% (down 3.2ppts) expect ‘good times’ over the next five years;
- In May, just under a third of businesses, 33.1% (up 0.7ppts), said their business is ‘better off’ financially than this time a year ago, while well over two-fifths, 45.2% (up 5.9ppts), said the business is now ‘worse off’ (the highest figure for this indicator since November 2020);
- However, businesses are still broadly positive about their own prospects for the next year, with 40.2% (up 1.5ppts) expecting the business will be ‘better off’ financially this time next year, while just over a quarter, 25.1% (down 2.6ppts), expect the business will be ‘worse off’.
Michele Levine, CEO of Roy Morgan, says Business Confidence was virtually unchanged in May as the Albanese Government’s first Federal Budget failed to provide a boost for the monthly indicator which remains below the neutral level of 100 for the fourth straight month:
“Roy Morgan Business Confidence was virtually unchanged at 90.3 in May, completing a period of four straight months in negative territory. This is the longest stretch below 100 since October 2021, the final month of Australia’s COVID-19 pandemic related lockdowns.
“Business Confidence is 9.9pts (-9.9%) lower than it was a year ago in May 2022 – the first month of the RBA’s current interest rate increasing cycle. Since then, the RBA has raised interest rates by 4% points to 4.1% – the highest official interest rates for more than a decade since May 2012.
“A look at the key indicators shows that businesses are still broadly confident about their own circumstances with 40.2% expecting the business will be ‘better off’ financially this time next year compared to 25.1% who say they will be ‘worse off’ financially.
“The real concern businesses have is about the fortunes for the Australian economy going forward. Over three-fifths of businesses expect ‘bad times’ for the Australian economy over the next year, 61.2%, and over the next five years, 62% – a new record high.
“On a State-by-State basis Business Confidence is flying high in only one State – Western Australia – at 134.3 in May – and up 32.3pts (+31.7%) on a year ago. The mining-dependent State has had consistently higher Business Confidence than other States in recent years as the mining industry has outperformed other industries with high prices of commodities including iron ore and gas.
“Business Confidence in other States remains weak and is just above the national average in New South Wales (95.9) and Tasmania (92.4), but well below the national average in Queensland (89.1), South Australia (82.6) and lowest of all in Victoria (74.0) – the lowest Business Confidence in the State since the second COVID-19 lockdown in July 2020.
“At an industry level there were two industries flying high in April-May 2023 with Business Confidence well above 110 – over 25% higher than the national average. Leading the pack are Education & Training on 122.8 and Information Media & Telecommunications on 116.2. Also performing well are Finance & Insurance on 106.5 and Accommodation & Food Services on 106.1.
“In contrast, there continues to be very low Business Confidence for the Electricity, gas & water industry at only 36.6 and Agriculture at 73.9 – both well below the national average.”
The latest Roy Morgan Business Confidence results for May are based on 1,492 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.
Check out the latest data of Roy Morgan Business Confidence 2010-2023 here.
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 |
