West Australians’ confidence in the economy has taken another hit in the March quarter, painting a concerning picture for the State’s economic recovery as weak demand continues to constrain business’ capacity to grow and invest.
WA businesses are struggling from consumers’ reluctance to part with discretionary cash, which means boosting consumer confidence through an improved job market is critical to stimulate the WA economy.
WA still retains the unenviable position of having the second highest unemployment rate (5.9%) and youth unemployment rate (15.2%). 123,400 West Australians remain underemployed and want more work and 84,300 West Australians are unemployed.
West Australian’s growing confidence in the economy is now held up by a jobs market that isn’t improving. Without a concerted effort to create new jobs in the economy, it is difficult to see when consumer confidence will return to WA.
The Chamber of Commerce and Industry WA’s (CCI) Consumer Confidence Survey is the only survey of its kind in WA, canvassing the views of adult consumers in both metropolitan Perth and regional WA.
Despite cost of living pressures easing slightly this quarter, it continues to be cited by West Australians as their biggest dampener on confidence. Almost three in five (59%) West Australians said living costs such as transport, groceries and utilities stifled their confidence in the economy and over two-thirds (68%) do not expect to make a major purchase in the next quarter, up 8 per cent.
WA consumers’ overall financial health continues to be mixed, with more people reporting that they can pay their bills on time, up 4 per cent, but a decrease in people able to pay off their credit card, down 4 per cent, likely due to increased spending over the Christmas period. The net positive effect of low interest rates on confidence has improved for the first time since March 2018, up 6 per cent, on the back of bolstered speculation of an RBA interest rate cut this year.
West Australians’ confidence in the economy’s short-term prospects has weakened slightly this quarter, with four out of five consumers (80%) expecting the WA economy to improve or remain unchanged – down 2 per cent. Consumers outlook for the future has also declined, down 2 per cent to 79 per cent. Confidence does however remain above the long-term average.
WA has the highest tax on jobs of any state, making it more expensive to create a job here than anywhere else. Taxing small business jobs is something that every other state has avoided by gradually reducing the tax on small business jobs over time. The WA Government now needs to follow suit.
Total employment in WA has declined for five consecutive months in trend terms, which should ring alarm bells for the Government. If the Government wants to achieve its 150,000 jobs target and reduce unemployment for West Australians, they must now reduce this tax on WA small business jobs.
To read CCI’s Consumer Confidence Survey click here.