Roy Morgan Research’s business confidence survey in July indicated there are tentative signs the Australian economy is recovering.

The July results increased to 117.3 following four consecutive months of decline, including the June figure of 112.7.

Norman Morris, Roy Morgan Research industry communications director, said business confidence in Australia has improved for the first time in five months due to a number of positive factors impacting on business in Australia.

“These include an increase of 5.2 per cent in the ASX 200 over the month, the end of the government wrangling with the electing of Kevin Rudd as PM, and the abolition of the carbon tax,” he said.

“The continual decline in the value of Australian dollar was also a positive factor for many industries. On the negative side there was still concern over the global economy, the China slowdown and no interest rate cut in July by the RBA.”

The retail sector confidence remains around average but has declined to the lowest level in 2013 and remains a major concern. On that note, the positive industry remains to be finance and insurance (132.1) followed by education and training (128.6) and information media and telecommunications (127.6).

All states except NSW showed some improvement in business confidence in July. Tasmania and Victoria are the most confident states. The downturn in the mining industry is obviously having a big impact on business sentiment in WA which has fallen back to around average after having been well ahead for some time.

At the same time, the Roy Morgan Research consumer confidence survey in July also improved to 116.2, up from 114.6 in June.

“The improvement in consumer confidence in July was also as a result of largely the same influences that impacted business outlook but the smaller improvements seen in consumer confidence was also likely to be partly the result of no further decline in the home loan rate,” Morris said.

“Consumers are feeling far more positive however about conditions being better in the next 12 months and this is driving up their confidence. The decline in the official cash rate in early August is likely to have a positive impact on both business and consumer confidence in August.”