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Lockdowns drive business confidence into decline

New research reflects the volatility of the past year, showing business confidence declining during the month of July when Sydney, Melbourne and Adelaide all spent time in lockdown.

Lockdowns drive business confidence into decline
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  • Juliet Helmke
  • August 06, 2021
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A monthly report tracking confidence among Australian businesses conducted by market research firm Roy Morgan reflected a growing level of doubt about business stability in July after Sydney, Melbourne and Adelaide all experienced lockdowns.

Confidence among businesses dropped by 8.7 per cent in July, bringing the month’s average to 117.2 points, a decrease of 11.1 points.

Yet despite the sudden decline, it’s still 32.9 points higher than a year ago, when confidence had climbed back up to 84.3 points after the record low of 76.9 points in April 2020.

This puts July’s confidence rating just above the long-term average of 113.9 points.

Out of 1,341 respondents, 59.9 per cent remained positive, stating they still expected their businesses to do well in the months ahead.

The most confident industries in July were wholesale, public administration and defence, agriculture, information media and telecommunications, and property and business services, according to Roy Morgan. Confidence remained above 130 points across these sectors throughout the month. 

Michele Levine, CEO of Roy Morgan, said July’s dip was the biggest setback of 2021.

“The big driver of the monthly fall in business confidence was New South Wales, with the indicator falling 31.8 points (-23.2 per cent) to 105.3 in the state during July. NSW is now the only state with a below-average business confidence as the Sydney region battles its largest outbreak of COVID-19 since the pandemic began,” Ms Levine said.

Ms Levine said that lockdowns presented the biggest barriers to business confidence, noting that Australians were likely to experience more lockdowns over the ensuing months.

The federal government has agreed that 80 per cent of Australia’s adults must be fully vaccinated to move past the reliance on lockdowns. It’s expected this threshold will be met towards the end of the year.

“This outlook creates a challenging environment for businesses which rely on certainty to plan for future events and is likely to temper business confidence during this period until a large majority of Australians are fully vaccinated,” Ms Levine said.

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