Business Confidence Index

IBISWorld forecasts business confidence to average 98.1 index points in 2024-25, rising by 0.6 index points from the previous year. The more confident outlook is driven by easing inflationary and cost of living pressures. Elevated capacity utilisation has also provided support for business confidence. Despite inflation falling inside the target band in September 2024, the Reserve Bank of Australia (RBA) expects inflation to bounce back after the government’s energy subsidies end. Persistent inflation, high interest rates and the ongoing global and domestic economic uncertainty are set to continue weighing on business confidence over the year. Tight labour market conditions are constraining business output, while elevated input costs are squeezing profit margins for some businesses, curbing increases in business confidence.

Australia's relative success in containing COVID-19 helped limit the pandemic's effects on business confidence. Over the September 2022 quarter, business confidence strengthened to be above average as capacity utilisation reached a record high. Nonetheless, material shortages and rising fuel prices raised purchase costs for most Australian businesses while increasing job vacancies constrained output. Business confidence has since turned negative as concerns about the economic outlook have deepened, with labour shortages and inflationary pressures negatively affecting areas of the economy.