BUSINESSES DUBIOUS ABOUT ECONOMIC PROSPECTS

Written on the 10 March 2015

BUSINESSES DUBIOUS ABOUT ECONOMIC PROSPECTS

AUSTRALIAN businesses are becoming disenfranchised with the economic outlook, according to Roy Morgan Research.

The marketing company's latest Business Confidence survey shows an eight per cent decline in February, down to 105.7 points.

Last month's levels are well below those seen prior to the Federal Election in 2013, despite the Reserve Bank's decision to lower the interest rate.

Roy Morgan Research industry communications director Norman Morris says all aspects of the index recorded a decline, however economic uncertainty over the next five years was the biggest contributor to the low score.

"The decline in business confidence during February was most likely a result of continued uncertainty regarding the level of the budget deficit, difficulties getting elements of the budget expenditure past the Senate, wrangling over leadership, negative employment outlook, global economic issues including much focus on Greece and China as well as general ambivalence in Australian consumer confidence," Morris says.

"The RBA rate decision not only failed to counter all these negative factors but possibly sends a message that they are concerned about the economic outlook for Australia."

Morris says there are a few major sectors showing positive signs of growth, including finance and insurance, rental, hiring and real estate, and information media and telecommunications.

However the confidence levels are not enough to offset the subdued outlook in mining, construction, manufacturing and retail.

"Casting a shadow over the country's economic growth prospects is the fact that businesses are now less confident about investing in expansion," Morris says.

"With a big drop in investment by the mining industry and the less positive outlook by other sectors for growth for the next five years, this will be a major concern for state and federal governments.

"The extent to which banks pass on interest rate cuts to business is very likely to impact satisfaction levels and, more importantly their intention to borrow which was really the purpose of the RBA cut in rates to begin with."

Roy Morgan Research conducted 743 interviews across Australia with all types of businesses.


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