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Business confidence is back: what it means for your business

For the first time in months, Australian business confidence has pushed back into positive territory. Confidence influences how businesses plan, hire, and invest. When confidence improves, it signals that owners and managers are starting to feel more comfortable about the future.

According to the latest Roy Morgan Business Confidence Index, In July 2025, Business Confidence increased 0.6pts to 103.0, just above the neutral mark of 100. It also saw large rises in Business Confidence in New South Wales, up by 12.3%, and in Queensland, up by 9%.

Why confidence is climbing

The Business Confidence Index, based on surveys of business decision-makers, shows a noticeable lift in sentiment this July. Several factors are driving the upswing:

  • Stronger expectations for the year ahead: More businesses believe they’ll be better off financially in 12 months than they are today.
  • Optimism about the economy: Confidence in the performance of the Australian economy over the next five years has risen.
  • Interest rate expectations: With the Reserve Bank cutting the cash rate by 0.25% in August, and further easing seen as possible, many businesses are factoring in lower borrowing costs.
  • State-by-state improvements: Confidence has risen most sharply in New South Wales, Western Australia, and Queensland.

What this means for small and medium businesses

If you’re running a business, what should you consider with this rebound?

It’s a shift in the mood, not a guarantee

Confidence is about perception. It doesn’t guarantee sales will surge tomorrow, but it does create a more positive environment for planning and investment.

A chance to revisit your plans

If you’ve been holding off on upgrades, new hires or other growth projects, this may be a good moment to reassess. Lenders and partners often respond more to lending requests when sentiment is improving.

Keep it flexible

Confidence can turn quickly. Sharp dips in business confidence, which we’ve seen before, is a reminder of how sensitive businesses are to cost pressures and global conditions. If you do make new investments, be nimble and keep agility built into your plans.

Watch your sector closely

While national confidence is up, industries like agriculture and transport remain less optimistic. It’s important to look at trends in your specific sector when making decisions.

A cautious but welcome step forward

After a volatile start to the year, the lift in confidence is encouraging. It suggests that many business owners are beginning to see a clearer path ahead, supported by lower interest rates and a more stable outlook.

For small and medium businesses, this is less about rapid expansion and more about taking careful, deliberate steps forward. Reviewing your goals, exploring opportunities, and preparing for the year ahead can help you make the most of a more positive climate.