Confidence among retail business owners has swung back a little in January this year following a December 2025 plunge, new Roy Morgan research shows.
The $444 billion industry, according to the Australian Bureau of Statistics (ABS), had a neutral level of confidence of around 100 points through the second half of 2025, which then slipped to 71.1 in the final month of 2025.
Retail business confidence recovered slightly as 2026 rolled in, rising to 85.9. Despite the recovery, retail was the third least-confident industry in January 2025.
This is just ahead of wholesale trade (85.6) and public administration and safety at 72.8.
Across all key industries, total business confidence slumped by 7.6 points to 97.4. This is the lowest confidence rating for nine months since April 2025 (96.7).
The result followed a spike in inflationary pressures with the official ABS annual inflation estimates for November at 3.4 per cent (released in early January), and now jumping to 3.8 per cent for the 12 months to December 2025 (released in late January).
The spike in inflationary pressures led to fears in January that the Reserve Bank (RBA) would be forced to raise interest rates – which the RBA did in early February – up 25 basis to 3.85 per cent.
Keeping the total rating elevated was high confidence in the utilities space (132.5), mining (128.6), rental, hiring and real estate services (122.3), financial and insurance services (118.2) and education and training (117.1).
Roy Morgan CEO Michele Levine said the monthly decrease in January was driven by a sharp drop in confidence about businesses’ own prospects over the next year, with 33.3 per cent (down 13.1ppts) expecting they will be ‘better off’ financially this time next year, with 24.4 per cent (up 5.4ppts) expecting to be ‘worse off’. This is an overall net decline of 18.5 percentage points.
“On a state-by-state basis, business confidence was highest in Tasmania (116.2) after the Liberal Premier Jeremy Rockliff’s Government’s successful push to secure Parliamentary approval of the construction of Hobart’s new stadium in early December – a huge boost for the state’s economy.
“Business Confidence is above average in Queensland (107.2), the only state to have a higher rating than a year ago. However, business confidence is below 100 in all other states – New South Wales (96.5), Victoria (95.9), Western Australia (90.2) and South Australia (86.6).
Confidence regarding the performance of the Australian economy over the next year was virtually unchanged with 57.3 per cent (up 0.3ppts) expecting ‘good times’ while 41.2 per cent (up 0.4ppts) expect ‘bad times’.
Businesses’ views on the long-term future of the Australian economy over the next five years fell in January with 29 per cent (down 4.4ppts) expecting ‘good times’ over the next five years compared to 62.1 per cent (up 0.6ppts) expecting ‘bad times’.
Net sentiment on whether now is a ‘good or bad time to invest in growing the business’ dropped to its lowest for over a year with 34.9 per cent (down 5.4ppts) saying the next 12 months will be a ‘good time to invest’ in growing the business while 36.9 per cent (up 2.8ppts) say the next 12 months will be a ‘bad time to invest’.