Business confidence has sunk to a new record low in July 2026, driven by the ongoing conflict between the United States and Iran, according to Roy Morgan.
The Roy Morgan Business Confidence index dropped by 1.5 points to a new record low of 76. This is marginally below the previous record low of 76.1 in May this year, with confidence among retailers in particular even lower, at 69.8. The neutral level of confidence is 100.
The decline in business confidence in July is despite the Reserve Bank leaving interest rates unchanged at its meeting in mid-June, with inflation dropping by 0.8 percentage points in the three months to June, according to the Australian Bureau of Statistics.
However, as July progressed, the fragile ‘Memorandum of Understanding’ (MOU) between Iran and the United States broke down, and the two sides returned to a low-level conflict in July.
Roy Morgan CEO Michele Levine said business confidence has languished below 80 for four straight months – another record first.
“Until the Iran War is ultimately resolved, the upward pressure on oil prices, and thus inflation, and inflation expectations, will remain ever present,” Levine said.
“Concerns about higher inflation feed directly into worries about interest rates being increased, and put downward pressure on business confidence, as well as consumer confidence – which is even lower at only 74.7.”
Driving the small decrease in July were declines in confidence about the financial situation of the business compared to a year ago and looking ahead over the next 12 months.
Now only 18.7 per cent of businesses (down 7.9 percentage points in July) say their business is ‘better off’ financially than this time a year ago. This is the lowest figure for this indicator for over six years since May 2020.
Nearly 3 in 10 (29.1 per cent – down 4.3 percentage points) expect business to be ‘better off’ financially this time next year.
In addition, now a new record low 25.5 per cent (down 3.9 percentage points) say now is a ‘good time to invest’ in growing the business, while 48 per cent (up 0.2 percentage points) say it’s a ‘bad time to invest’.
For retailers in particular, its low score of 69.8 is slightly up on June numbers, when it was down at 66.5. Retail is the fourth least confident industry, with its level in July down 39.3 points from a year ago.
Retail sits just ahead of agriculture, forestry & fishing on 69.6, rental, hiring & real estate services on only 68.2, and lowest of all is accommodation & food services on just 65.3. The last is down a large 58.6pts on a year ago – the largest decline of any industry from a year ago.
“At an industry level, there is again only one industry (out of 18) with business confidence in positive territory just marginally above the neutral level of 100 – and that is education & training on 100.1, although down 5.8pts on a year ago,” Levine said.
“At the other end of the scale are several industries with low business confidence below 70.
“Confidence in the agriculture, forestry & fishing industry has been at a sustained low level and has averaged only 79.5 since the start of 2023 – clearly the lowest average of any industry over this extended period.”