Australia's business confidence drops to lowest level for 3 years

SYDNEY, Oct. 17 (Xinhua) -- Market research company Roy Morgan on Tuesday reported that its Australian business confidence index dipped by 7.6 points to 87.1 in September, which dived to its lowest level for three years since September 2020.

Roy Morgan noted that the index has now spent eight consecutive months below the neutral level of 100, the longest stretch in negative territory since October 2020.

Apart from the monthly fall, Australia's business confidence registered a significant drop of 13.6 points from a year ago.

Roy Morgan pointed out that the year-on-year slump has been driven by falls in Australia's three largest states of New South Wales (NSW), Victoria and Queensland.

The largest decrease was detected in Victoria, down by 24.9 percent from a year ago to 81.5, with the index in Australia's most-populated state of NSW having slid by 19.6 percent to 87.6.

Business confidence is now the lowest in Queensland at only 76.9 and has dropped by 3.6 percent compared to a year ago.

"The drop in business confidence in September was driven by falling confidence about the financial situation of businesses. Now only 31.3 percent of businesses say they are 'better off' financially than this time a year ago," said Michele Levine, chief executive officer of Roy Morgan.

"Even more concerningly, businesses are increasingly worried about their own prospects over the next year with an all-time record high 30.5 percent of businesses saying they now expect to be 'worse off' financially this time next year," Levine noted.

The expert mentioned that average retail petrol prices in Australia have now reached over two Australian dollars (about 1.27 U.S. dollars) per liter for over two months since mid-August.

"This is the first time ever that petrol prices have stayed at such a high level for an extended period, and this is adding to concerns that inflationary pressures will continue to pressure the RBA (Reserve Bank of Australia) to raise interest rates further before the end of the year," said Levine.

She also shed light on the challenges posed by the low business confidence in Australia's largest states, which comprise around 75 percent of the national economy and population.

"As long as business confidence remains sluggish in New South Wales, Victoria and Queensland, the national economy will struggle to return to long-term growth averages," Levine added.