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Business confidence up, but consumer optimism down

31-08-2010
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Business confidence in Australia is at a seven month high, but consumer confidence has dipped sharply over the last month, according to a Roy Morgan survey.

Business confidence last month rose to 117.6 up from 109.6 in July – driven by a belief that Australia will be facing ‘good times’ financially over the next 12 months.

More business owners also believe the coming year will be a good time to invest in the growth of their business, with 55 per cent now looking to invest (up from 51 per cent in July).

At the same time, consumer confidence has slumped with those surveyed expressing less confidence about the Australian economy over the next 12 months.

Only 26 per cent of Australians expect good economic times over the next 12 months, a drop of 4 per cent, while 34 per cent expect ‘bad times’, a rise of 2 per cent.

Gary Morgan, executive chairman at Roy Morgan, blamed falls in the price of iron ore, the perceived threat to the mining boom and the cancellation of HP Billiton’s $30 billion Olympic Dam copper and uranium mine as among the reasons for the slump.

But Norman Morris, industry communications director for Roy Morgan Research, says: “The recovery in business confidence in July and August provides some optimism that we have passed the worst but the situation remains fairly fragile given the uncertain global economic outlook and weakness in commodity prices having the potential to impact severely on Australia.

“The ultimate impact of any reductions in interest rates on economic activity will be influenced by the willingness of business to grow which in turn will be dependent on how business sees the economic conditions improving over the next few years.”

Roy Morgan’s consumer confidence rating is based on more than 1,000 face-to-face interviews while the business confidence survey surveyed a representative sample of 2,830 businesses.

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