Australian business confidence has fallen to its worst level on record, according to Roy Morgan.
The research firm’s Business Confidence index dropped to 76.1 in May 2026, a new all-time low that now sits below even the pandemic trough of 76.9 recorded in April 2020. The index has fallen 28.9 points since the start of the year.
This comes after ANZ-Roy Morgan Consumer Confidence slipped to record lows in recent months, which this week appears to be shifting back up again.
Five industries recorded confidence readings below 80, including wholesale trade at 75.3 and accommodation and food services at 78 – the latter down 41.6 points year-on-year, the steepest sector decline recorded. Manufacturing also featured among the weakest performers.
Retail did not feature in either the bottom five or top five, but will be sitting somewhere between 78 and 90.
The deterioration across businesses has been rapid and broad-based. The proportion of businesses expecting bad times for the Australian economy over the next 12 months has risen to 59 percent – up 18.2 percentage points since December 2025 – while only 38.5 percent expect good times, down 18.5 points over the same period. The net proportion of businesses expecting to be better off financially next year has also plunged by 32.5 percentage points since the start of 2026.
All six states recorded business confidence below 90 in May – the first time this has occurred – with Victoria posting the highest reading of any state at 88.4, itself down 9.9 points year-on-year. New South Wales fell to 74.9, down 21.3 points, while Queensland recorded the sharpest state-level decline, dropping 41.3 points from a year ago.
The slide has coincided with a series of RBA rate rises. The Reserve Bank lifted rates by 0.25 per cent to 3.85 percent in February – its first increase since November 2023 – triggering an 8.8-point slump in confidence that month alone. The RBA has since raised rates on two further occasions.
Consumer sentiment has tracked a parallel decline, compounding the demand-side pressure on apparel and discretionary retail. The ANZ-Roy Morgan Consumer Confidence index fell to 80.3 in April — its lowest in around three years — with the net proportion of households rating it a good time to buy major household items dropping to negative 25, the weakest reading since September 2024.
Mining was the only industry to record business confidence above 100 in the three months to May, rising 22.8 points year-on-year to 124.1. Every other sector, including those central to fashion supply and distribution, remains in negative territory.
“The plunge in confidence began in January before the US and Israel attacked Iran, but the falls have continued as worries about energy prices and inflation have increased, and the Reserve Bank has now raised interest rates at three straight meetings for the first time since early 2023,” Roy Morgan CEO Michele Levine said.