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Roy Morgan Business Confidence plunged 13.8pts to 106.7 in March after Russian invasion of Ukraine and large spike in petrol price

The latest Roy Morgan Business Confidence results for March are based on 1,383 detailed interviews with a cross-section 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.

In March 2022 Roy Morgan Business Confidence plunged by 13.8pts (-12.9%) to 106.7. The large drop in Business Confidence came after the Russian invasion of Ukraine in the last week of February which caused huge price increases for key energy products such as oil, gas and coal.

The spike in oil prices caused an immediate impact at the petrol bowser with Australian retail prices jumping to over $2 per litre for the first time in history during the month of March.

There were falls across the index, but businesses are still broadly positive about the future with a majority of 50.5% of businesses expecting ‘good times’ for the Australian economy over the next year while almost half, 46.7% of businesses, say the next 12 months will be a ‘good time to invest in growing the business’.

On a State-based level there were monthly decreases across the board in March with the largest declines in the re-opened Western Australia, down 28.6pts (-21.9%) to 101.8, Victoria, down 16.9pts (-13.4%) to 108.8, South Australia, down 13.7pts (-11.2%) to 108.8 and Queensland, down 10.8pts (-9.9%) to 98.7.

Business Confidence in March 2022 is now below the long-term average of 113.7 but remains significantly higher than the latest ANZ-Roy Morgan Consumer Confidence of 93.4 for March 28 – April 3, 2022.


Roy Morgan Monthly Business Confidence -- Australia

Roy Morgan Business Confidence - March 2022 (106.7)

Source: Roy Morgan Business Single Source, Dec 2010-Mar 2022. Average monthly sample over the last 12 months = 1,413.


Business Confidence in March 2022 is down significantly on a year ago – except in Victoria

Business Confidence in March showed the first impacts of the Russian invasion of Ukraine and the subsequent large spike in energy costs in Australia – including of the petrol price which soared to a record high of well over $2 per litre. In the week to Sunday March 20, 2022, average petrol prices hit a high of $2.13 per litre.

Rising petrol prices have also fed into increasing Inflation Expectations throughout the economy which has in turn increased speculation about when the RBA will raise interest rates for the first time in over a decade.

These pressures have led to a fall in Business Confidence which is now lower in all States except Victoria than this time a year ago. Overall Business Confidence is at 106.7, down 17.3pts (-14.0%) on a year ago.

Business Confidence was highest in New South Wales in March at 113.5, but this was down a significant 23.9pts (-17.4%) on a year ago as the State was beset by wild weather and devastating floods – particularly in Northern New South Wales.

Victoria was the lone State to have higher Business Confidence in March than a year ago, up 0.9pts (+0.9%) to 108.8. One year ago, in March 2021 Victoria had just experienced an unprecedented third state-wide lockdown and businesses were understandably nervous about further lockdowns to come – which subsequently proved to be the case throughout the remainder of 2021.

Level with Victoria is South Australia, with Business Confidence of 108.8, representing a decline of 8.2pts (-7.1%) on a year ago. During March ALP Leader Peter Malinauskas became the first Opposition Leader to win an election in Australasia since the COVID-19 pandemic with the ALP’s comprehensive victory over the L-NP Government of former Premier Steven Marshall.

Business Confidence is below average in the three other States with the biggest year-over-year fall in Western Australia which opened up to the rest of Australia in early March and subsequently suffered its first big wave of COVID-19 during the entire pandemic. Business Confidence plunged by 45.5pts (-30.9%) from a year ago to be just narrowly in positive territory at 101.8 in March.

Business Confidence is now below the neutral level of 100 in Queensland and Tasmania. In Queensland the measure plunged by 16.8pts (-14.6%) to only 98.7 in March as Brisbane and much of South-East Queensland was hit by severe flooding throughout the month of March. Business Confidence is also significantly lower, by 30.3pts (-26.3%) at only 85.1 in Tasmania.


Business Confidence by State in March 2021 vs March 2022

Roy Morgan Business Confidence - March 2022 (106.7)

Source: Roy Morgan Business Single Source, March 2021, n=1,324, March 2022, n=1,383. Base: Australian businesses.


Property & Business Services, Finance & Insurance, Transport, Postal & Warehousing, Wholesale and Accommodation & Food Services are the most confident industries

Property & Business Services was the most confident industry in February-March 2022 with Business Confidence at a high 129.6, an increase of 1.3pts (+1%) on a year ago.

Also performing well were Finance & Insurance with a Business Confidence of 128.7, a large increase of 12.7pts (+11%) on a year ago, Transport, Postal & Warehousing with a Business Confidence of 126.2, an increase of 3.2pts (+2.6%) on a year ago and Accommodation & Food Services on 123.3, an increase of 16.7pts (+15.6%) on a year ago – easily the largest increase for any industry.

Although Business Confidence increased for these four industries compared to a year ago, it fell for all other industries highlighted in this chart compared to a year ago.

Despite falling on a year ago Business Confidence was still well into positive territory for the Wholesale industry at 125.3, down 19.2pts (-13.3%) on a year ago, Community Services on 122.9, down 0.6pts (-0.5%) on a year ago and Administration & Support Services on 120.6, down 7.8pts (-6.1%) on a year ago.


Business Confidence for Top 10 Industries in February – March 2022

Roy Morgan Business Confidence - March 2022 (106.7)

Source: Roy Morgan Business Single Source, February - March 2022, n=2,696. Base: Australian businesses.
Note: In the chart above green bars represent Business Confidence in positive territory above the national average.


Businesses remain confident about the year ahead with a majority expecting ‘good times’ for the Australian economy and a large plurality expecting to be ‘better off’ this time next year

  • A slim majority of businesses, 50.5% (down 11.8ppts) expect ‘good times’ for Australia’s economic performance over the next year while just under half, 46.5% (up 13.1ppts), expect ‘bad times’;

  • In addition, a clear plurality of businesses, 43.0% (down 10.1ppts), expect the business will be ‘better off’ financially this time next year, the lowest figure for this indicator for 18 months since September 2020, while only 21.7% (up 4.5ppts) expect the business to be ‘worse off’;

  • Now an increasing plurality of businesses, 41.1% (up 0.9ppts), said the business is ‘better off’ financially than this time a year ago while just under a third, 32.9% (up 2ppts), said the business is ‘worse off’;

  • However, businesses have become far less confident about the longer-term outlook for the Australian economy with 44.7% (down 7.8ppts) expecting ‘good times’ for the Australian economy over the next five years compared to a rising plurality of 48.1% (up 7.6ppts) which expect ‘bad times’;

  • Businesses are fairly evenly split on whether now is a ‘good time to invest in growing the business’ with a small plurality of 46.7% (down 6.4ppts), saying the next 12 months is a ‘good time to invest’, while nearly as many, 43.4% (up 6.6ppts) said it will be a ‘bad time to invest’.


Michele Levine, CEO of Roy Morgan, says Business Confidence plunged in March for a reason un-related to COVID-19 – the Russian invasion of Ukraine and the subsequent large spike in energy costs including petrol prices, which soared well over $2 per litre for the first time ever:

“Roy Morgan Business Confidence fell heavily in March, down 13.8pts (-12.9%) to 106.7, the sixth straight month of ‘zig-zagging’ up and down since being at 104.6 in September 2021. A number of influences have impacted on Business Confidence during the last six months including the re-opening of NSW, Victoria and the ACT in October, followed by a highly disruptive wave of the ‘Omicron variant’ during the Summer months as well as extensive flooding in NSW and Queensland in March.

“The big global event during March has been the Russian invasion of Ukraine which prompted waves of sanctions on the Russian economy, including from Australia, and led to a global surge in key energy prices such as for coal, oil and gas.

“The most direct impact on the Australian economy has been the escalating price of petrol which was at an average of 158.4 cents per litre in the final week of 2021 and increased by a massive 54.1 cents (+34.2%) by the middle of March – a huge impost on all Australians.

“Responding directly to the rapidly escalating price of petrol Treasurer Josh Frydenberg announced a six-month suspension of half of the 44.2 cents per litre fuel excise. The cut of 22.1 cents (+2.2 cents per litre of GST) amounts to an immediate cut of nearly 25 cents per litre for the next six months and significantly lowers the price of petrol during this period.

“The good news is that despite this rapid increase in the petrol price businesses were still broadly positive in March with a majority of 50.5% expecting ‘good times’ for the Australian economy over the next year and a clear plurality of 46.7% saying the next 12 months is a ‘good time to invest in growing the economy’.

“However, there are broader long-term-concerns for many with an increasing number of businesses, 48.1%, up 7.6ppts, expecting ‘bad times’ for the Australian economy over the longer-term of five years – the only indicator to be in negative territory during March.

“At a State-based level Business Confidence is highest in the re-opened, and largest, economies of NSW (113.5) and Victoria (108.8) as well as in South Australia (108.8) which elected a new ALP Government led by Peter Malinauskas in March. The victory for Malinauskas was the first by any Opposition Leader in Australasia since the COVID-19 pandemic began after six straight victories to incumbents in the ACT, NT, Queensland, Tasmania, Western Australia and New Zealand.

“The impact of higher inflation will be felt by all Australians over the rest of this year and is set to lead to interest rate increases later this year – perhaps as early as June, straight after next month’s Federal Election. The handling of an inflationary environment most Australians have never experienced is set to provide the first big test for whichever party is elected in May.

“The latest Roy Morgan Poll on Federal voting intention, taken after Prime Minister Scott Morrison faced a barrage of accusations of bullying from fellow members of the Liberal Party, shows the ALP 57% well in front of the L-NP 43% on a two-party preferred basis with Opposition Leader Anthony Albanese heavily favoured to lead the ALP to victory.”

The latest Roy Morgan Business Confidence results for March are based on 1,383 detailed interviews with a cross-section 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.


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