Real estate leads business confidence upswing.

Real estate leads business confidence upswing.

Posted on Tuesday, April 08 2014 at 9:54 AM

The real estate and finance industries recorded the strongest gains on Roy Morgan Research’s latest Business Confidence survey for March 2014.

Australian business confidence recovered slightly during the month,
which helped offset falls in confidence during February.

The increase of 3.3 points from February to a score of 120.6 puts business
confidence back above levels preceding the federal election in August 2013.

The survey is the result of 1511 interviews with businesses across all
industries, sizes and locations around Australia.

The modest recovery in business confidence was driven by an increasing
proportion of businesses reporting an improvement in their financial position
compared to 12 months.

The survey also showed a sharp increase in the belief that the next 12
months will be a good time to invest in growing a business.

Industries supporting the rise are real estate (up 1.8 points to 140.8),
professional services (up 2.1 points to 126.1) and wholesale trade (up 2 points
to 130.1).

Business confidence in the mining industry fell 16.9 points, although at
148.5 it remains the most confident industry in Australia.

The finance industry remained at a very high level of business confidence
at 142.6, though slightly down from February (-0.6 points).

On a state-by-state basis, the results were less glowing with all states
reporting a decrease in business confidence over the month except Victoria.

Nigel Smith, a director at Roy Morgan Research, says the results bode
well for property and banking.

“The resilience of business confidence in March 2014 appears to largely
reflect the strength of the finance and real estate industries, particularly in

“Recent figures showing a surge in new dwelling approvals for the
Melbourne CBD is most likely driving this, although the construction industry
in the state appears to have only moderately benefited from this strength.”

Smith says interest rates are having a direct impact on some of the best
performing industries.

“With the exception of the mining industry, it is notable that between
2011 and 2014 the industry that has consistently shown the highest business confidence
is the finance insurance industry – corresponding (with) a period of
historically low interest rates in Australia.

“If Australian interest rates do rise in 2014, business confidence in
this industry is likely to suffer a setback.”

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