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Business confidence slumps in August

Market volatility and increased political uncertainty resulted in an 8.6 per cent decline in business confidence this August, according to Roy Morgan Research.

Business confidence declined by 9.7 points in August, mainly due to the poor economic outlook for Australia over the next 12 months.


Roy Morgan Research industry communications director Norman Morris said, "It is not surprising that business confidence declined in August, given the ongoing volatility of global financial markets during the month.

"Of major impact locally was the 8.6 per cent drop in the ASX, the result of increased global economic and political uncertainty, particularly the dramatic movement in the Chinese stock market.

"Continued low commodity prices and their negative outlook, poor GDP growth, and the plummeting Australian dollar are all contributing to uncertainty in the market and impacting business confidence," said Mr Morris.

The drop in confidence caused a fall in all components of the index. However, the greatest declines were in the way businesses felt about their financial position over the last 12 months and the deteriorating outlook for the next 12 months.


The research found the proportion of businesses looking to invest in growth over the next 12 months has dropped to 51 per cent, down from 57 per cent last month.

"Despite recent government tax incentives for micro and small businesses to invest, it is concerning to see that both these segments have shown a major loss of confidence in August and remain well below the confidence [levels] of medium and large businesses," said Mr Morris.