Roy Morgan Business Confidence drops to 87.5 in July – 65% of businesses expect ‘bad economic times’ for the economy over the next year
In July 2023 Roy Morgan Business Confidence was 87.5 (down 1.3pts since June). 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 left interest rates unchanged in July at 4.1%. The RBA has subsequently opted to leave interest rates unchanged again in August and may now have finished its record interest rate hiking cycle since mid-2022.
Business Confidence has now spent six 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 37.7% saying the business will be ‘better off’ financially this time next year compared to only 27% that say they will be ‘worse off’, while 48% say the next 12 months will be a ‘good time to invest in growing the business’.
However, large majorities of businesses are worried about the performance of the Australian economy with 65% expecting ‘bad times’ for the economy over the next year and almost as many, 62.8%, expecting ‘bad times’ for the economy over the next five years.
Business Confidence is now 24.4pts below the long-term average of 111.9 but still 9.1pts higher than the latest - ANZ-Roy Morgan Consumer Confidence of 78.4 for July 24-30, 2023.
Roy Morgan Monthly Business Confidence - Australia
Source: Roy Morgan Business Single Source, Dec 2010-July 2023. Average monthly sample over the last 12 months = 1,489.
Business Confidence is over 25pts higher in Western Australia than the national average
Business Confidence was down slightly in July, by 1.3pts to 87.5 to its lowest since September 2020 (85.6). However, the index is down considerably more, by 7.4pts (-7.8%), compared to a year ago.
Despite the overall index being down compared to a year ago, at a State-based level four States have improved their Business Confidence – Western Australia, South Australia, Victoria and Tasmania. In contrast, Business Confidence is down in Queensland and has plunged in NSW from a year ago.
Most notably, Business Confidence in New South Wales is now the lowest in the country, and down a large 25pts (-23.8%) from a year ago to only 79.9. This is the lowest Business Confidence in New South Wales for over three years since April 2020 – the first full month of the COVID-19 pandemic.
The drop in New South Wales has driven the entire index down compared to a year ago. Queensland is the only other State with lower Business Confidence than a year ago, down 2.8pts (-3.3%) to 80.0.
The shining light is again on Western Australia, with Business Confidence in the State up 6.9pts (+6.4%) from a year ago to 113.9 – over 25pts above the national average. Business Confidence in Western Australia has averaged over 125 so far this year – over 25pts higher than any other State.
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 over $20 billion for financial year 2022-23.
Business Confidence is up marginally and just above the national average in South Australia, up 1.6pts (+1.7%) to 94.9, in Victoria, up 0.9pts (+1.0%) to 91.1 and Tasmania, up 10.4pts (+13%) to 90.6.
Business Confidence by State in July 2022 vs July 2023
Source: Roy Morgan Business Single Source, July 2022, n=1,641, July 2023, n=1,586. Base: Australian businesses. *Tasmanian Business Confidence is measured over two months: June-July 2022 cf. June-July 2023.
Education & Training is the most confident industry again – nearly 40pts above average
Over the last two months only five industries, Education & Training, Community services, Accommodation & Food Services, Mining and Recreation & Personal had Business Confidence in positive territory above the neutral level of 100.
The most confident industry was again Education & Training with Business Confidence of 126.2, an increase of 13pts (+11.5%) 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.
In second place is Community Services on 111.5, but down 2.4pts (-2.1%) on a year ago just ahead of Accommodation & Food Services on 109.0, up 5pts (+4.8%) on a year ago, the Mining industry on 105.6, down 4pts (+3.6%) on a year ago and Recreation & Personal on 102.5, up 5.6pts (+5.8%) on a year ago.
There’s a familiar industry at the bottom with Business Confidence lowest of all for Electricity, gas & water on only 49.6 during June and July 2023, and down 40.1pts (-44.7%) on a year ago.
Other industries with low Business Confidence are Property & Business Services on 76.7, down 55.1pts (-41.8%) on a year ago, Transport, Postal & Warehousing on 80.2, down 19pts (-19.2%) on a year ago, Agriculture on 80.3, down 10.9pts (-12%) on a year ago and Administration & Support Services on 83.3, down 23.9pts (-22.3%) on a year ago.
Business Confidence for Top 5 and Bottom 5 Industries in June – July 2023
Source: Roy Morgan Business Single Source, June – July 2023, n=3,080. 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.
Business Confidence down 1.3pts to 87.5 in July as businesses grow more worried about their own prospects and the Australian economy’s performance going forward:
- In July, just under a third of businesses, 30.5% (down 3.1ppts), said their business is ‘better off’ financially than this time a year ago, while almost half, 46.2% (down 0.2ppts), said the business is now ‘worse off’;
- However, businesses are still broadly positive about their own prospects for the next year, with 37.7% (down 3.4ppts) expecting the business will be ‘better off’ financially this time next year (the lowest figure for this indicator for over four years since April 2019), while just over a quarter, 27% (up 1.3ppts), expect the business will be ‘worse off’;
- Views on whether now is a ‘good or bad time to invest in growing the business’improved on a month ago with 48.0% (up 3ppts) saying the next 12 months will be a ‘good time to invest’ in growing the business and 42% (down 6.3ppts) who say the next 12 months will be a ‘bad time to invest’;
- In July businesses were more negative about Australia’s economic performance over the next year with an increasing majority of 65.0% (up 2.8ppts) expecting ‘bad times’ (the highest figure for this indicator for nearly three years since September 2020)while only a third, 33.3% (down 2.3ppts), expect ‘good times’;
- Businesses were also more negative on the longer-term outlook for the Australian economy with a majority of 62.8% (up 1.2ppts) expecting ‘bad times’ for the Australian economy over the next five years (a new record high for this indicator) while under a third, 30.7% (down 2.1ppts) expect ‘good times’ over the next five years (a new record low for this indicator).
Michele Levine, CEO of Roy Morgan, says Business Confidence dropped to its lowest in nearly three years in July as confidence in the economy over the long-term dropped to record lows:
“Roy Morgan Business Confidence was down 1.3pts to 87.5 in July, completing a period of six 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 8pts (-8.3%) lower than it was a year ago in July 2022, just after the RBA started raising interest rates. The RBA has since raised interest rates to an 11-year high of 4.1% but left interest rates unchanged in its most recent two meetings in July and August.
“A look at the key indicators shows that businesses are still broadly confident about their own circumstances with 37.7% expecting the business will be ‘better off’ financially this time next year compared to 27% who say they will be ‘worse off’ financially – a net positive of 10.7%.
“The real concern businesses have is about the fortunes for the Australian economy going forward. Nearly two-thirds of businesses expect ‘bad times’ for the Australian economy over the next year, 65%, and over the next five years, 62.8% – a new record high figure for this indicator.
“On a State-by-State basis Business Confidence continues to fly high in only one State – Western Australia – at 113.9 in July – and up 6.8pts (+6.4%) on a year ago. So far this year Business Confidence has averaged an exceptional 125.9, over 25pts 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.
“Of more concern is the low Business Confidence in Australia’s largest State of New South Wales – at only 79.9 in July and down a large 25pts (-23.8%) on a year ago. This is the lowest Business Confidence in New South Wales since the early days of the pandemic in April 2020 at only 67.9.
“At an industry level it is Education & Training which continues to fly high at 126.2 in June-July 2023 – over 40% higher than the national average. Also performing well are Community Services on 111.5, Accommodation & Food Services on 109.0 and Mining on 105.6.
“In contrast, there continues to be very low Business Confidence for the Electricity, gas & water industry at only 49.6 and Property & Business Services 76.7 – both well below the national average.”
The latest Roy Morgan Business Confidence results for July are based on 1,586 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 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
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 |
