Australian business confidence from the monthly survey (Roy Morgan Business Confidence index)
- fell by 2.9 points (-2.9%) to 97.3
- this is its second straight monthly decline
- its now at its lowest since September 2020
Commentary from the report makes for grim reading if you are interested:
The biggest issues during the month were related to the energy ‘crisis’ along Australia’s east coast, the growing challenge of inflation and the RBA’s decision to increase interest rates to deal with the threat of inflation.
- The RBA increased interest rates by 0.25% in May and by 0.50% in June, the largest two-monthly increase in interest rates for nearly three decades The RBA has also signalled it is set to continue increasing interest rates over the next few months
- Another direct impact of the increasing level of inflation is the pressure on wages to increase and keep pace with the level of inflation
- One of the factors driving inflation higher and leading to the RBA’s decision to increase interest rates is the increasing price of energy including oil, gas and coal. The rising price of oil is reflected directly in the increasing petrol price – now back over $2 per litre despite the cut to the petrol excise in half (25 cents per litre) by former Treasurer Josh Frydenberg in late March.
- The east coast energy ‘crisis’ was caused by a multitude of factors but is related to the increasing prices of energy inputs such as gas and oil and a lack of supply being made available to the Australian market and thus forcing prices to increase. Although the immediate threat to energy supplies and reliability appears to have receded the risk is still there that it will return in the months ahead as we head towards the summer months when electricity usage is at its highest.
- Clearly the rising prices of different forms of energy, as well as questions about the reliability of energy supply, is a large concern for businesses that rely on consistent supplies of affordable energy to maintain a profitable business.