Due to a negative outlook for the Australian economy over the next 12 months, business confidence declined 2.2 per cent in July, according to a Roy Morgan survey.
According to research by Roy Morgan, business confidence declined 2.5 points in July, now down 6.8 points or 5.7 per cent from 12 months ago.
Roy Morgan stated that confidence among consumers and businesses is fragile, and significantly affected by both domestic and international events.
Roy Morgan Research industry communications director Norman Morris said: “In Australia there are still major headwinds, including the low iron ore price, no resolution to the worsening budget deficit, and the fact that over two million Australians are either unemployed or underemployed.”
“The end result of these and other problems has been a large decline in the Roy Morgan Government Confidence Rating (GCR) among consumers, which has dropped from 99.5 in July 2014 to only 91.0 currently.
“While there were some positive external factors impacting on business and consumer confidence during July — such as reduced anxiety over the Greek financial problem, less publicity about China’s slowing growth rate, and share-market volatility — the basic problems concerning the local economy remain," he said.
The research found that 49 per cent of Australian businesses expect domestic economic conditions to be bad over the coming 12 months.
“Despite recent government tax incentives for micro- and small businesses to invest, it is concerning to see that micro-businesses in particular show no real improvement in confidence, and remain well below the level of confidence of medium and large businesses,” Mr Morris said.
Mr Morris noted that business confidence across states remained even in July, with Tasmania narrowly ahead, followed by New South Wales, Victoria, Queensland, Western Australia and South Australia.
Although confidence is decreasing, 57 per cent of businesses think the next 12 months will be a good time to invest in growing their business. This is above the five-year average of 56 per cent, but below June's result of 59 per cent.