Roy Morgan’s Business Confidence index plunged 8.8 points to 88.6 in February this year, its lowest confidence rating for over five years since September 2020 during the first year of the COVID-19 pandemic.
Business confidence has now dropped by 16.4 points in the last two months, the largest two-month fall since August 2021, with the recent rate hike decision by the Reserve Bank of Australia expected to drive confidence down further ahead.
Roy Morgan also pointed out that this result came before the Israeli and US attacks on Iran which began on the final day of February and have already sent oil and gas prices soaring.
The biggest driver of the index slump related to businesses’ views of the Australian economy’s performance over the next year and next five years.
Nearly half of businesses (49.5 per cent – up 8.3ppts) now say Australia will have ‘bad times’ economically over the next year compared to 48.1 per cent (down 9.2ppts) that say we’ll have ‘good times’ – a net plunge of 17.5 percentage points.
Meanwhile, under a quarter of businesses (23.1 per cent – down 4.9ppts) expect there’ll be ‘good times’ for the economy over the next five years while 67.2 per cent (up 5.1ppts) expect ‘bad times’ for the economy.
Business Confidence is now a large 20 points below the long-term average of 109.6, but is still 19.9 points higher than the latest ANZ-Roy Morgan Consumer Confidence of 68.5 on March 9-15, 2026.
The mining industry, as well as rental, hiring and real estate services, education and training, and administration and support services are the most confident industries during February 2026, all sitting above 114.4, which is above the neutral rating of 100.
Over the last three months there were eight industries with business confidence in positive territory above 100, with retail not being one of them. Confidence among retailers plunged at the end of 2025, but has since recovered slightly, in that it’s not part of the five least-confident industries.
Arts and recreational services, construction, farming, wholesale, and public administration and safety made up the bottom five, with the last two below 80 and the top (arts and recreational services) at 92.2. In January, retail business confidence was 85.9.
Roy Morgan CEO Michele Levine said an important factor to note when considering these movements is that these were the views of Australian businesses in February, before the outbreak of the conflict in the Middle East when US & Israel launched attacks on Iran on the final day of February.
“Since the conflict began oil and gas prices have surged and there are growing concerns about a global economic crisis as long as the Strait of Hormuz remains closed,” Levine said. “The added global economic uncertainty is sure to put additional pressure on businesses as long as the war continues.”
Across the states, business confidence was highest in Queensland (106.5) and South Australia (100.6). South Australia faces an election this week at which Premier Peter Malinauskas is set to be re-elected in an election landslide, according to the latest Roy Morgan South Australian State poll.
Business confidence is lowest of all in Victoria at only 69.0 – and down by a large 32.4 points on a year ago. Levine said Victoria faces an election later this year and the incumbent Government led by Jacinta Allan faces a tough fight for re-election.
The latest Roy Morgan Victorian State poll shows One Nation (26.5 per cent) now leads the incumbent Labor (25.5 per cent) and the Opposition L-NP Coalition (21.5 per cent) on primary support.