Business confidence rose further in October to reach its highest level since November last year, new data has revealed.
Roy Morgan Research’s Business Confidence index increased by 5.8 per cent to 119.3 points, which the group said was generally expected initially as a result of Malcom Turnbull becoming prime minister. However, it has strengthened further in October to be 16.3 per cent higher than in August prior to the leadership change.
October business confidence was above the five-year average (116.9 index points) and higher than it was 12 months ago (114.9).
Norman Morris, industry communications director at Roy Morgan Research, said it is potentially a good sign for the economy that business confidence has continued to improve in October, given the positive impact the leadership change already had in September.
“Contributing to this improvement was the fact that there was a lack of major bad economic news during the month – in fact, the ASX increased by 4.3 per cent,” he said.
“There were, however, some headwinds emerging during the month, with issues relating to housing prices possibly peaking, higher mortgage rates, continued volatility in global financial markets, high household debt and widespread publicity and uncertainty regarding tax reforms.”
Mr Norris said there are some tentative signs that increased confidence in some sectors will help make up for the decline in mining.
“In October, there was an increase in confidence in retail, finance and insurance, rental/hiring/ real estate, education/training, wholesale trade and information/media/telecommunications,” he noted.
“The all-important construction sector showed some decline, as did manufacturing.”