Roy Morgan Business Confidence drops to

(+42.8%) to 141.1 in June, the highest in the state since June 2021. Throughout the first half of 2023, WA has maintained strong Business Confidence, averaging 128.0, nearly 30 points higher than TAS.

WA’s strong performance has propped up the national average, being the only state with an above-average rating. If WA were excluded, the remaining five states would only have a rating of 82.3 in June.

This good performance in WA can be attributed to the ongoing commodities boom in iron ore and gas exports, which heavily concentrate in the state. This boom is reflected in the Federal Budget’s record high surplus of nearly $20 billion for the 2022-23 financial year.

Conversely, Business Confidence has declined in all other states compared to a year ago. NSW stands at 87.9, down 13.4 points (-13.2%), while QLD is at 86.1, down 8 points (-8.5%). The Southern States have even lower measures, with TAS at 79.6, down 24.7 points (-23.7%), and SA at 79.2, down 15.8 points (-16.6%). VIC has the lowest Business Confidence in the country at 74.5, down 16.1 points (-17.8%) from a year ago.

The first half of 2023 has seen the lowest average Business Confidence on record, with 83.0.

Education & Training and Mining are clearly the two most confident industries in mid-2023

Among various industries, only five sectors—Education & Training, Mining, Community Services, Public Administration & Defence, and Information Media & Telecommunications— had Business Confidence levels exceeding the national average of 89.6 by over 20% in the past two months.

Once again, the Education & Training industry demonstrated the highest confidence with a Business Confidence rating of 125.8, marking a substantial increase on last year of 19.1 points (+17.9%. This industry experienced a rise in Business Confidence over the past year. The reopening of Australia’s borders, the return of international students and relaxation of pandemic restrictions played a significant role in driving this soaring confidence.

Following a close second is the Mining industry, with a robust Business Confidence rating of 120.4, indicating a yearly growth of 14.3 points (+13.5%). High commodity prices, particularly for coal, gas, and iron ore, have resulted in record trade surpluses and a $20 billion Federal Budget surplus for 2022-23—the first surplus in 15 years.

Community Services came in third with a rating of 108.6, up a yearly 5.9 points (+5.7%).

Public Administration & Defence followed closely behind at 107.6, with an increase of 23.6 points (+28.1%), while Information Media & Telecommunications stood at 107.5, more than 20% above the national average despite a decline of 14.4 points (-11.8%) from a year ago.

On the other end, the Electricity, Gas & Water industry recorded the lowest Business Confidence of just 26.5 in May and June 2023, experiencing a significant decline of 79.3 points (-74.9%) compared to a year ago. Additional industries with low confidence include Recreation & Personal at 78.7, down 27.3 points (-25.8%) from a year ago, and Administration & Support Services at 82.7, down 23.6 points (-22.2%) over the same period.

Business Confidence down 1.5pts to 88.8 in June as businesses grow more worried about the prospects for the Australian economy going forward:

• A third of businesses, 33.6% (up 0.5 points), reported being in a better financial position compared to last year, however, 46.4% (up 1.4 points), stated that their now worse off, marking the highest figure since October 2020.

• Despite the overall economic concerns, businesses remain optimistic about their own prospects in the coming year. Around 41.1% (up 0.9 points) anticipate being financially better off, while 25.7% (up 0.6 points) expect to be worse off.

• Views on investing in business growth showed a slight decline. Approximately 45.0% (down 1.3 points) believe the next 12 months will be a good time to invest, while 48.3% (up 1.3 points) consider opposite.

• Pessimism regarding Australia’s economic performance over the next year increased, with 62.2% (up 1 point) anticipating bad times, while only 35.6% (down 2.4 points) expect good times.

• Long-term outlook for the Australian economy also suffered, with 61.6% (down 0.4 points) of businesses expecting bad times over the next five years, marking a new record low. Meanwhile, 32.8% (down 1.7 points) expect good times.

Michele Levine, CEO of Roy Morgan, says Business Confidence was dropped to its lowest in nearly three years in June as the RBA raised interest rates to an 11-year high of 4.25%:

“Roy Morgan Business Confidence was down 1.5pts to 88.8 in June, completing a period of five straight months in negative territory. This is the longest stretch below 100 since October 2020 at the end of Victoria’s second wave of COVID-19 – almost three years ago.

“Business Confidence is 8.5pts (-8.7%) lower than it was a year ago in June 2022, just after the RBA started raising interest rates. The RBA raised interest rates to an

11-year high of 4.25% in June before pausing and leaving interest rates unchanged last week.

“A look at the key indicators shows that businesses are still broadly confident about their own circumstances with 41.1% expecting the business will be ‘better off’ financially this time next year compared to 25.7% who say they will be ‘worse off’ financially.

“The real concern businesses have is about the fortunes for the Australian economy going forward. Over three-fifths of businesses expect ‘bad times’ for the Australian economy over the next year, 62.2%, and over the next five years, 61.6%.

“On a State-byState basis Business Confidence continues to fly high in only one State – Western Australia – at 141.1 in June – and up 42.3pts (+42.8%) on a year ago. So far this year Business Confidence has averaged an exceptional 128.0, almost 30pts higher than any other State.

“The mining-dependent State has had consistently higher Business Confidence than other States in recent years as the mining industry has outperformed other industries with high prices of commodities including iron ore and gas – which have continued during early 2023.

“Business Confidence in other States remains weak and is below the national average in NSW (87.9), Queensland

(86.1), Tasmania (79.6), SA (79.2) and lowest of all in Victoria (74.5). Business Confidence in Victoria has averaged only 83.0 during the first six months of 2023 – the lowest for the first six months of a year on record and lower than any of the pandemic years of 2020-22.

“At an industry level there were two industries flying high in May-June 2023 with Business Confidence above 110 – over 30% higher than the national average. Leading the pack are Education & Training on 125.8 and Mining on 120.4. Also performing well are Community Services on 108.6, Public Administration & Defence on 107.6 and Information Media & Telecommunications on 107.5.

“In contrast, there continues to be very low Business Confidence for the Electricity, gas & water industry at only 26.5 and Recreation & Personal at 78.7 – both well below the national average.”

The latest Roy Morgan Business Confidence results for June are based on 1,494 detailed interviews with a crosssection of Australian businesses from each State and Territory. Detailed findings are available to purchase on a monthly or annual subscription as part of the Roy Morgan Business Confidence Report.