Roy Morgan Business Confidence rebounded by 5.8 points to 96.0 in December as Australians spent big for Christmas
In December 2022 Roy Morgan Business Confidence was 96.0 (up 5.8pts since November), largely recovering from the 6.4pts of decline in the prior month of November. The largest improvements in Business Confidence were driven by increases in confidence about the performance of the Australian economy over the next year and next five years.
The increase in Business Confidence came despite the RBA’s decision to raise interest rates for an eighth straight month in early December, up by 0.25% to 3.1% - the highest official interest rates for over a decade since December 2012.
A bright spot for the Australian economy during 2022 has been the strong retail spending figures and Roy Morgan in conjunction with the Australian Retailers Association (ARA) projected this would continue. Post-Christmas retail sales are forecast to increase 7.9% on a year ago to a record high $23.5 billion led by strong increases in Hospitality sales – up by 30% on this time last year.
The biggest driver of the increase in Business Confidence related to the performance of the Australian economy over the next year with 39.2% (up 5.1ppts) of businesses expecting ‘good times’, while 39.4% (up 5.9ppts) expect ‘good times’ for the economy over the next five years.
Businesses are increasingly positive about their own prospects, with 47.3% (up 2.6ppts) expecting to be ‘better off’ financially this time next year compared to 23.3% (down 3.6ppts) expecting to be ‘worse off’.
Business Confidence is now 16.8pts below the long-term average of 112.8 but is still higher than the latest - ANZ-Roy Morgan Consumer Confidence of 87.7 for January 9-15, 2023.
Roy Morgan Monthly Business Confidence -- Australia
Source: Roy Morgan Business Single Source, Dec 2010-Dec 2022. Average monthly sample over the last 12 months = 1,416.
Business Confidence is highest in South Australia, Western Australia and New South Wales
Year-on-year Business Confidence in December is down by a large 24.2 pts (-20.2%) to 96.0 and is now 27.2pts lower than two years ago in December 2020 (123.2) during the middle of the COVID-19 pandemic. The index is down from a year ago in all six States, and by at least 20 points in most States.
In three States Business Confidence is marginally above the neutral level of 100 in South Australia at 106.5, but down 3.2pts (-3%) on a year ago, Western Australia at 103.7, down 19pts (-15.5%) and in New South Wales at 100.7, down 23.9pts (-19.2%).
Business Confidence in Victoria is just below the neutral level of 100 at 95.3, but down 23.6pts (-19.9%) from a year ago, and is at 94.3 in Tasmania, down 36.2pts (-27.8%) on a year ago.
The largest fall in Business Confidence from a year ago in percentage terms is in Queensland with the indicator down by 34.2pts (-29.5%) to only 81.8. Business Confidence in the State has lagged the rest of the nation averaging only 81.9 over the last seven months since the Federal Election and hasn’t been above 90 since June 2022 (94.1).
Business Confidence by State in December 2021 vs December 2022
Source: Roy Morgan Business Single Source, December 2021, n=1,697, December 2022, n=1,410. Base: Australian businesses. *Tasmanian Business Confidence is measured over two months: Oct-Nov 2021 cf. Nov-Dec 2022.
Information Media & Telecommunications and Education & Training are the only industries to increase Business Confidence from a year ago
Over the last two months only three industries, Information Media & Telecommunications, Education & Training and Administration & Support Services had Business Confidence over 15% higher than the national average of 93.1.
The most confident industry was Information Media & Telecommunications with Business Confidence of 112.4, an increase of 13.1pts (+13.2%) on a year ago just ahead of Education and Training on 111.5, up 2.4pts (+2.2%). These were the only two industries to have higher Business Confidence in the closing months of 2022 compared to a year earlier.
Administration & Support Services has high Business Confidence of 110.7, although this is down 11.1pts (-9.1%) on a year ago ahead of Property & Business Services on 106.5, down 22.3pts (-17.3%).
After a strong period for travellers during mid-2022 Accommodation & Food Services has a high Business Confidence of 104.6, although this is down 25pts (-19.3%) on a year ago as rising inflation and interest rates start to impact.
These are the only seven industries with Business Confidence higher than the neutral level of 100 in November-December 2022 with the other two industries including Community Services on 104.3, down 11pts (-9.6%) on a year ago, and Transport, Postal & Warehousing on 101.0, down 21.8pts (-17.8%).
Electricity, gas & water has the lowest Business Confidence in November-December 2022 at only 48.2, well over 40% below the national average of 93.1 and down a large 56.8pts (-54.1%) on a year ago. Almost as low is Finance & Insurance on 65.9, down 50.8pts (-43.5%) on the same time in 2021.
Other industries with far lower than average Business Confidence include Construction on 81.5, down 11.6pts (-12.5%) on a year ago and Retail on only 76.5, down 31.6pts (-29.2%) on a year ago.
Business Confidence for Top 5 and Bottom 5 Industries in November – December 2022
Source: Roy Morgan Business Single Source, November-December 2022, n=2,784. 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 positive about their own prospects over the next year and sentiment regarding the Australian economy improved in December although is still in negative territory:
- In December businesses are increasingly positive about their own prospects for the next year, with 47.3% (up 2.6ppts) expecting the business will be ‘better off’ financially this time next year, while under a quarter, 23.3% (down 3.6ppts) expect the business will be ‘worse off’;
- Slightly more than a third of businesses, 36.3% (down 1.2ppts), said their business is ‘better off’ financially than this time a year ago while slightly fewer, 34.3% (down 5.8ppts), said the business is now ‘worse off’;
- Now nearly two-fifths of businesses, 39.2% (up 5.1ppts) expect ‘good times’ for Australia’s economic performance over the next year while nearly three-fifths, 58.7% (down 4.9ppts), expect ‘good times’;
- In addition, businesses are also broadly negative on the longer-term outlook for the Australian economy with a majority of 54.5% (down 5.7ppts) expecting ‘bad times’ for the Australian economy over the next five years while only 39.4% (up 5.9ppts) expect ‘good times’ over the next five years;
- Businesses are now less confident about investing in growing their business with 39.6% (down 3.5ppts) saying the next 12 months will be a ‘good time to invest in growing the business’, while an unchanged majority of 51.2% said it will be a ‘bad time to invest’ in growing the business.
Michele Levine, CEO of Roy Morgan, says Business Confidence rebounded in December despite the RBA delivering an eighth straight interest rate increase early in the month:
“Roy Morgan Business Confidence increased 5.8pts to 96.0 in December, largely recovering from a fall of 6.4pts in November. However, Business Confidence remains 24.2pts below its level of a year ago in December 2021 (120.2).
“Four of the five components of Business Confidence increased in December with 47.3% of businesses (up 2.6ppts) now saying they expect to be ‘better off’ financially this time next year – the highest reading for this indicator since the Federal Election in May last year. Now fewer than a quarter of businesses, 23.3% (down 3.6ppts) expect to be ‘worse off’.
“However, the real problem is that businesses continue to be largely negative on the outlook for the Australian economy with 58.7% expecting ‘bad times’ for the economy over the next year and 54.5% expecting ‘bad times’ for the economy over the next five years.
“On a State-based level Business Confidence is now in positive territory in the three States of South Australia (106.5), Western Australia (103.7) and New South Wales (100.7) and just below neutral in Victoria (95.3) and Tasmania (94.3).
However, Business Confidence is lowest of all is Queensland at only 81.5. The ‘Sunshine State’ has had consistently low Business Confidence since this year’s Federal Election averaging only 81.9 over the last seven months (June – December 2022).
“At an industry level there were seven industries flying high in November-December 2022 with Business Confidence above 100. Leading the pack are Information Media & Telecommunications on 112.4 and Education & Training on 111.5 – the only two industries to increase Business Confidence compared with the same time a year ago.
“Other industries with high confidence include Administration & Support Services on 110.7, Property & Business Services on 106.5, Accommodation & Food Services on 104.6, Community Services on 104.3 and Transport, Postal & Warehousing on 101.0.
“In contrast there are four industries for which Business Confidence is lagging more than 10% below the national average including Electricity, gas & water, down a massive 56.8pts (-54.1%) on a year ago to 48.2, Finance & Insurance, down 50.8pts (-43.5%) to 65.9, Retail, down 31.6pts (-29.2%) to 76.5 and Construction, down by 14.2pts (-14.9%) to 81.5.”
The latest Roy Morgan Business Confidence results for December are based on 1,410 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 |
