Business Confidence Hit By Political Uncertainty
Latest numbers from Roy Morgan reveal local business confidence dived 3% to 110.2 in August, driven by a state of political instability. It marks the forth straight monthly decline, notching its lowest point since August 2016 (108.6).
Despite the drop, Roy Morgan CEO, Michele Levine, asserts the negative impact of political change may “already be behind us”, with consumer confidence lifting since the leadership change.
“…a closer look at Business Confidence throughout the month shows the fall was due to a sharp loss of confidence in the final third of August following leadership tensions in the Federal Government.”
“Business Confidence throughout the first two-thirds of August came in at 115.0 before falling to 99.5 for the period of August 20-31, 2018 when leadership tensions arose.”
On a state-by-state basis, business confidence in NSW plummeted 15% in late August, with QLD down under 10%.
Business confidence for small businesses under $100K turnover, and large organisations over $2 million were the most hit by the leadership change.
“Both these types of businesses had declines in Business Confidence of over 20% in late August while medium-sized businesses with a turnover between $100K to $2m were less impacted with Business Confidence down by just under 5% compared to earlier in the month,” remarks Levine.
Despite the drop, last week’s ANZ Roy Morgan Consumer Confidence report revealed a 3.2% lift (up 3.2pts).
Levine asserts the sharp fall in business confidence was therefore “short-lived”, with Australians looking beyond short-term politician tensions when assessing the economy.
The Aussie dollar has continued its slide against the greenback this morning, after being hammered on Friday following concerns about a US-China trade war – notching a two-year low of 71.05 US cents in early trade.