Big decline for business confidence

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Business confidence saw a precipitous drop in August, and now sits at its lowest level in four years.

Roy Morgan Research's Business Confidence index fell by 9.7 points in August, down 8.6% to 102.6. The research company said the decline was mainly due to the continued poor economic outlook for Australia over the year ahead.

The index saw its biggest declines in how businesses felt about their own financial position over the last 12 months, and their deteriorating financial outlook for the next 12 months.

The result brings the business confidence index down 11.6% from 12 months ago. The current level is the index's lowest since August 2011.

“It is not surprising that business confidence declined in August, given the ongoing volatility of global financial markets during the month. Of major impact locally was the 8.6% drop in the ASX, the result of increased global economic and political uncertainty, particularly the dramatic movement in the Chinese stock market. Continued low commodity prices and their negative outlook, poor GDP growth, and the plummeting Australian dollar are all contributing to uncertainty in the market and impacting business confidence," Roy Morgan industry communications director Norman Morris said.

There was a bright spot in the findings, however. Confidence in finance and insurance, rental and real estate and wholesale trade remained above average.