Though consumer confidence has dipped sharply over the last month, business confidence in Australia is improving, according to data from Roy Morgan.
The softening in consumer confidence has been driven by Aussies having less confidence about the Australian economy over the next 12 months, less certainty about their finances compared to a year ago and fewer people saying that now is a good time to buy major household items, according to the research firm.
Consumer confidence in Australia
Only 26% of Australians expect good economic times over the next 12 months, a drop of 4%, while 34% expect ‘bad times’, a rise of 2%.
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.
However, business confidence showed signs of improvement.
Business confidence in Australia
Norman Morris, industry communications director at Roy Morgan Research said: “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 borrow which in turn will be dependent on how business sees the economic conditions improving over the next few years,” he said.