In April 2020 Roy Morgan Business Confidence was down 18.2pts (-19.1%) to76.9 – plunging to a second consecutive record monthly low.
However, there is some good news with Business Confidence in the second halfof April showing a distinct improvement over the first half as Australiaflattened the curve of new COVID-19 infections. In the first two weeks ofApril the index hit low of only 69.3, but averaged 82.0 during the second halfof April.
The sharp decline in Business Confidence in April was driven by morebusinesses, 64.8% (up 25ppts) saying their business is ‘worse off’ financiallythan this time last year, businesses being less confident about the Australianeconomy into the future with nearly three-quarters, 73.2% (up 10.5ppts),expecting ‘bad times’ over the next year and over half, 58.4% (up 12.3ppts)expecting ‘bad times’ over the next five years.
Only a third, 35.9% (down 10.3ppts) of Australian businesses said the nextyear will be a ‘good time to invest in growing the business’, while nearlyhalf, 48.2% (up 6.6ppts), said it will be a ‘bad time to invest’;
Some Australian businesses are already looking past the COVID-19 pandemic andare growing more confident about the next year with 43.1% (up 3.6ppts)expecting the business will be ‘better off’ financially this time next year,while only 27.6% (down 1.4ppts) expect the business to be ‘worse off’;
Overall the April 2020 Business Confidence level is 26pts lower than it was ayear ago, and a significant 37.7pts below the long-term average of 114.6.Business Confidence for April came in slightly below the ANZ-Roy MorganConsumer Confidence for the month of 79.8. Consumer Confidence has continuedits recovery in recent weeks and now sits at 89.5 on the weekend of May 2/3,2020.
Roy Morgan Monthly Business Confidence — Australia
Source: Roy Morgan Business Single Source, Dec 2010-Apr 2020. Averagemonthly sample over the last 12 months=1,008.
Biggest declines for Transport, Postal & Warehousing, Accommodation & Foodservices, Information Media & Telecommunications and Property & BusinessServices
Business Confidence in March was down significantly for many industries almostacross the board.
The biggest declines were for Transport, Postal & Warehousing (down 43%),Information Media & Telecommunications (down 43%), Accommodation & FoodServices (down 40%), Property & Business Services (down 37%), Construction(down 34%) and Education & Training (down 26%).
There were however a few industries that managed a small improvement in Aprilincluding Public Administration & Defence (up 1%), Wholesale (up 5%),Manufacturing (up 4%) and Recreation & Personal (up 16%) to a still well belowaverage rating of 65.2.
Business Confidence falls most in NSW & South Australia in April but up in WA& Tasmania
Business Confidence fell hard in April, but the fall was not uniform acrossall States. The largest fall was in New South Wales with Business Confidencedown 33% on March to only 67.9. Business Confidence also fell significantly inSouth Australia (down 29%) and Queensland (down 18%).
In Victoria the index fell marginally by 6% to a new record low of 82.4.However, there was better news in the two most isolated states with the indexup 5% in Tasmania and increasing by 8% in Western Australia.
Michele Levine, CEO of Roy Morgan, says Business Confidence began April in asteep negative direction as Business Confidence began plunging in late Marchand continued into April:
“Roy Morgan Business Confidence hit a record monthly low of only 76.9 inApril – down 18.2pts (-19.1%) from its previous record low reached in March.The large drop followed the introduction of strict social distancing and self-isolation directives from the Federal and State Governments that persistedthroughout the month of April.“The good news is that Business Confidencebottomed in the first half of the month and has since improved. For the firsthalf of April Business Confidence averaged only 69.3, similar to its ratingforlate March of 71.4. Since this low-point the index has improved andaveraged 82.0 during the second half of April as Australia ‘flattened thecurve’ of new COVID-19 infections.“There are several bright spots within theresults. Perhaps surprisingly, Australian businesses were growing moreconfident in April about their own prospects with 43.1% of Australiansbusinesses expecting the business to be ‘better off financially’ this timenext year – up 3.6ppts from March.“This positivity is reflected in WesternAustralia and Tasmania which both saw an improvement in Business Confidence inApril as the two States pursued a policy of self-isolation preventing any non-residents from flying in or visiting either State.“There were also severalindustries which had an increase in Business Confidence in April includingPublic Administration & Defence, Wholesale, Manufacturing and also Recreation& Personal which had suffered a large decline in March as social distancingprovisions were introduced.“The announcement that Australia will undergo athree-stage re-opening process over the next two months to ‘reboot’ theeconomy has provided further hope that Australia may already be past the worstof COVID-19 and businesses can look forward to less restrictions on theiractivities in the coming weeks.”
Plunge in Business Confidence in April driven by poor comparisons to a yearago
- In April there has been a sharp decline in those businesses, 14.8% (down 19.3ppts), which say the business is ‘better off’ financially than this time last year while a clear majority and a new record high of 64.8% (up 25ppts) said the business is ‘worse off’;
- However, despite the large monthly decline, in a personal sense businesses are already growing more confident about the next year with 43.1% (up 3.6ppts) expecting the business will be ‘better off’ financially this time next year, while only 27.6% (down 1.4ppts) expect the business to be ‘worse off’;
- However, views about the Australian economy’s performance over the next year deteriorated in April 26.3% (down 4ppts) expecting the Australian economy to have ‘good times’ economically over the next year while a massive 73.2% (up 10.5ppts) expect ‘bad times’;
- Businesses are also less confident about the longer-term outlook with 36.8% (down 7.8ppts) expecting ‘good times’ for the Australian economy over the next five years compared to a clear majority of 58.4% (up 12.3ppts) which expect ‘bad times’;
- Only a third, 35.9% (down 10.3ppts) of Australian businesses said the next year will be a ‘good time to invest in growing the business’, while 48.2% (up 6.6ppts) said it will be a ‘bad time to invest’.
The latest Roy Morgan Business Confidence results for April are based on 1,191detailed interviews with a cross-section of Australian businesses from eachState and Territory. Detailed findings are available to purchase on a monthlyor annual subscription as part of the Roy Morgan Business Confidence Report.
% Change in Business Confidence by industry in April 2020 cf. March 2020
Source: Roy Morgan Business Single Source, March 2020, n=885, April2020, n-1,191. *Small sample sizes of under 50 businesses interviewed in theTransport, Postal & Warehousing, Information Media & Telecommunications,Accommodation & Food services and the Property & Business services industriesshould be treated with caution.
% Change in Business Confidence by State in April 2020 cf. March 2020
Source: Roy Morgan Business Single Source, March 2020, n=885, April2020, n-1,191. *Small sample sizes of under 50 businesses interviewed inTasmania should be treated with caution.
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