Business confidence is at its lowest level in almost four years, according to the latest Roy Morgan Research Business Confidence results.
Confidence has dropped 7.3 points from the result registered in March, hitting 105.1 during the month of April. Not only is this well below the five-year average of 117.3, it is the lowest it has been since the 101.8 seen in August 2011.
All components of the index registered a drop, with a poor economic outlook for the next 12 months cited as the strongest contributor to the decline.
Roy Morgan Research Industry Communications Director Norman Morris said the drop in confidence was “potentially bad news” for the economy, especially since the result was fueled by a pessimistic forecast.
“In this context, it is unlikely that the drop in the official cash rate that has just been announced by the RBA will encourage increased investment or borrowing, as this depends on a positive outlook, not just the interest rate. The decision to drop the interest rate also sends a possible message to business that conditions and the outlook are currently not good,” Mr Morris said.
“The continued negative economic news provides strong headwinds against which business investment must be made. These negative factors include the collapse in the iron ore price, constant revisions to the federal budget outlook, getting budget measures passed by the Senate, speculation about the forthcoming May budget, the slowdown in China, uncertainty regarding Greece, high unemployment and under-employment and tax reform.”
April saw approximately 22 per cent of the 705 businesses interviewed say they were better off financially than they were a year ago, 6 per cent less compared to the March result.