Business confidence recovers

Confidence among Australian businesses is back above the five-year average, according to the latest figures from Roy Morgan Research.

The group’s business confidence index recorded a 6.8 per cent jump in June to 119.5 index points – above the five-year average of 116.7 points.

According to Roy Morgan, the large rise in business confidence last month was mainly due to increased confidence about the year ahead.

The figures revealed that the proportion of businesses that expect to be better off financially in 12 months’ time than they are now has increased by 4.8 percentage points to 43.4 per cent, while the number of businesses expecting to be worse off has declined by 3.3 percentage points to 14.7 per cent.

In addition, the proportion of businesses that believe the next 12 months is a good time to invest in growth is up 6 percentage points to 57.2 per cent, while the number that say it is a bad time to invest is down 5 percentage points to 34.1 per cent.

Norman Morris, industry communications director at Roy Morgan Research, said that given the Coalition victory in the federal election was much closer than expected, as well as the increased size of the Senate’s crossbench, business confidence “may take a hit” this month.

“All businesses will have their eyes on the Coalition’s promised corporate tax cuts, reducing the corporate tax rate for large businesses to 25 per cent (from the current 30 per cent) over the next decade,” Mr Morris said.

“The Coalition’s election victory means this policy is still on the agenda and the prospect of tax cuts over the next few years should continue to support business confidence.

“Investment certainty is crucial for larger businesses undertaking major projects with substantial investment expenditure.”

[Related: Business confidence suffers budget aftershock]

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