Roy Morgan Business Confidence drops to 88.8 in June – lowest since September 2020
In June 2023 Roy Morgan Business Confidence was 88.8 (down 1.5pts since May). This is the lowest Business Confidence reading for nearly three years since September 2020 during Victoria’s second wave of COVID-19 when the index was at only 85.6.
The Business Confidence survey was conducted after the RBA raised interest rates for the second consecutive month in June to 4.1%. However, the survey was conducted before the RBA’s decision to leave interest rates unchanged in early July after the ABS released May 2023 CPI figures which showed annual inflation at 5.6% - a sharp decrease from 6.8% in the year to April 2023.
Business Confidence has now spent five 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 41.1% (up 0.9ppts) of businesses that expect the business will be ‘better off’ financially this time next year while around a quarter, 25.7% (up 0.6ppts), expect to be ‘worse off’ financially in a year’s time.
However, most businesses are worried about the performance of the Australian economy over the next five years with 61.6% expecting ‘bad times’ for the economy over the next five years and only 32.8% expecting ‘good times’ – a net negative of 28.8% points in June.
Business Confidence is now 23.2pts below the long-term average of 112.0 but still 14.7pts higher than the latest - ANZ-Roy Morgan Consumer Confidence of 74.1 for June 25 – July 2, 2023.
Roy Morgan Monthly Business Confidence -- Australia
Business Confidence is over 50pts higher in Western Australia compared to all other States
Business Confidence was down slightly in June, by 1.5pts to 88.8 to its lowest since September 2020 (85.6). However, the index is down considerably more, by 8.5pts (-8.7%), compared to a year ago.
There is one glaring exception to this down-trend over the past year with Business Confidence soaring in Western Australia, up 42.3pts (+42.8%), to 141.1 in June. This is the highest Business Confidence in the State for two years since June 2021.
Business Confidence in Western Australia has been consistently strong with the measure averaging 128.0 during the first six months of 2023 – almost 30pts higher than second-placed Tasmania on 99.3.
Not only that, but Western Australia is holding Business Confidence up for the rest of the country and is the only State with an above average rating. If Western Australia were removed from the national calculation Business Confidence in the remaining five States would be only 82.3 in June.
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. This commodities boom is reflected in the bottom line of the Federal Budget which has soared to a record high surplus of almost $20 billion for financial year 2022-23.
Business Confidence is down, and below the national average, in all five other States compared to a year ago. In New South Wales Business Confidence was at 87.9, down 13.4pts (-13.2%) on a year ago and is at 86.1, down 8pts (-8.5%) in Queensland.
The measure is even lower in the Southern States at 79.6, down 24.7pts (-23.7%) on a year ago in Tasmania and down 15.8pts (-16.6%) to 79.2 in South Australia.
Business Confidence is once again lowest in the country in Victoria at only 74.5, down 16.1pts (-17.8%) from a year ago. Business Confidence during the first six months of 2023 has averaged only 83.0 – the lowest for the first six months of a year on record and lower than any of the pandemic years of 2020-22.
Business Confidence by State in June 2022 vs June 2023
Education & Training and Mining are clearly the two most confident industries in mid-2023
Over the last two months only five industries, Education & Training, Mining, Community services, Public Administration & Defence and Information Media & Telecommunications had Business Confidence over 20% higher than the national average of 89.6.
The most confident industry was again Education & Training with Business Confidence of 125.8, an increase of 19.1pts (+17.9%) on a year ago. The industry was one of seven to experience an increase in Business Confidence over the last year.
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.
Just behind in second place is the Mining industry with a high Business Confidence of 120.4, up 14.3pts (+13.5%) on a year ago. The Mining industry has benefited from the high prices for key commodities led by coal, gas and iron ore which have led to record high trade surpluses over the last year. The booming prices have also led to a record high Federal Budget surplus of nearly $20 billion for 2022-23 – the first Budget surplus in 15 years.
In third place is Community Services on 108.6, up 5.9pts (+5.7%) on a year ago just ahead of Public Administration & Defence on 107.6, up 23.6pts (+28.1%) on a year ago and Information Media & Telecommunications on 107.5, although this is down 14.4pts (-11.8%) from a year ago, the industry is still more than 20% more confident than the national average.
There’s a familiar industry at the bottom with Business Confidence lowest of all for Electricity, gas & water on only 26.5 during May and June 2023, and down a large 79.3pts (-74.9%) on a year ago.
Other industries with low Business Confidence are Recreation & Personal on 78.7, down 27.3pts (-25.8%) on a year ago and Administration & Support Services on 82.7, down 23.6pts (-22.2%) on a year ago.
Business Confidence for Top 5 and Bottom 5 Industries in May – June 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 down 1.5pts to 88.8 in June as businesses grow more worried about the prospects for the Australian economy going forward:
- In June, just over a third of businesses, 33.6% (up 0.5ppts), said their business is ‘better off’ financially than this time a year ago, while almost half, 46.4% (up 1.4ppts), said the business is now ‘worse off’ (the highest figure for this indicator since October 2020);
- However, businesses are still broadly positive about their own prospects for the next year, with 41.1% (up 0.9ppts) expecting the business will be ‘better off’ financially this time next year, while just over a quarter, 25.7% (up 0.6ppts), expect the business will be ‘worse off’;
- Views on whether now is a ‘good or bad time to invest in growing the business’ were down on a month ago with 45.0% (down 1.3ppts) saying the next 12 months will be a ‘good time to invest’ in growing the business and 48.3% (up 1.3ppts) who say the next 12 months will be a ‘bad time to invest’;
- In June businesses were more negative about Australia’s economic performance over the next year with an increasing majority of 62.2% (up 1ppt) expecting ‘bad times’ while only just over a third, 35.6% (down 2.4ppts), expect ‘good times’;
- Businesses were also more negative on the longer-term outlook for the Australian economy with a majority of 61.6% (down 0.4ppts) expecting ‘bad times’ for the Australian economy over the next five years while under a third, 32.8% (down 1.7ppts) expect ‘good times’ over the next five years (a new record low for this indicator).
Michele Levine, CEO of Roy Morgan, says Business Confidence was dropped to its lowest in nearly three years in June as the RBA raised interest rates to an 11-year high of 4.1%:
“Roy Morgan Business Confidence was down 1.5pts to 88.8 in June, completing a period of five straight months in negative territory. This is the longest stretch below 100 since October 2020 at the end of Victoria’s second wave of COVID-19 – almost three years ago.
“Business Confidence is 8.5pts (-8.7%) lower than it was a year ago in June 2022, just after the RBA started raising interest rates. The RBA raised interest rates to an 11-year high of 4.1% in June before pausing and leaving interest rates unchanged last week.
“A look at the key indicators shows that businesses are still broadly confident about their own circumstances with 41.1% expecting the business will be ‘better off’ financially this time next year compared to 25.7% 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, 62.2%, and over the next five years, 61.6%.
“On a State-by-State basis Business Confidence continues to fly high in only one State – Western Australia – at 141.1 in June – and up 42.3pts (+42.8%) on a year ago. So far this year Business Confidence has averaged an exceptional 128.0, almost 30pts higher than any other State.
“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 – which have continued during early 2023.
“Business Confidence in other States remains weak and is below the national average in NSW (87.9), Queensland (86.1), Tasmania (79.6), SA (79.2) and lowest of all in Victoria (74.5). Business Confidence in Victoria has averaged only 83.0 during the first six months of 2023 – the lowest for the first six months of a year on record and lower than any of the pandemic years of 2020-22.
“At an industry level there were two industries flying high in May-June 2023 with Business Confidence above 110 – over 30% higher than the national average. Leading the pack are Education & Training on 125.8 and Mining on 120.4. Also performing well are Community Services on 108.6, Public Administration & Defence on 107.6 and Information Media & Telecommunications on 107.5.
“In contrast, there continues to be very low Business Confidence for the Electricity, gas & water industry at only 26.5 and Recreation & Personal at 78.7 – both well below the national average.”
Check out the latest results for our weekly surveys on Business Confidence, Consumer Confidence, and Voting Intention as follows:
Roy Morgan Business Confidence Statistics
ANZ – Roy Morgan Consumer Confidence Statistics
Federal Voting – Government Confidence Rating
The latest Roy Morgan Business Confidence results for June are based on 1,494 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.
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 |
