West Australian business confidence reached a four year high in the December 2017 quarter.
The latest WA Super–CCI Survey of Business Confidence conducted by WA’s peak business body, the Chamber of Commerce and Industry WA (CCI), is the only WA-specific index in the country, providing a snapshot of state-wide economic conditions and business expectations.
CCI Chief Economist Rick Newnham said 65 per cent of WA businesses are expecting the economy to improve or stay the same in the short term, up 18 per cent since the last quarter – the highest it has been in four years.
“This is the single largest quarterly jump in business confidence since the end of the GFC, confirming that there is no doubt that the WA economy is on the mend,” Mr Newnham said.
“About 84 per cent of businesses expect the WA economy to improve or stay the same in the next 12 months and confidence is well above its ten-year average.
“This is a complete turnaround from the lows of June 2015 when 75 per cent of WA businesses expected the economy to decline over the next 12 months.
“This highlights that businesses are feeling more confident about the future of the WA economy. They are expanding production and increasing investment as confidence spreads across WA.”
The WA Super – CCI Employment Index is also showing positive news for the WA jobs market.
“One in four businesses (25%) increased their employment levels this quarter, while almost half (48%) kept staff levels steady. These conditions are expected to continue to improve next quarter, which is an encouraging sign that slack in the labour market is tightening,” Mr Newnham said.
“While expectations of employment and profitability continue to improve, capital investment planning is also showing signs of growth, with over half of mining industry businesses (53%) expecting their capital expenditure to rise in the next quarter.”
Two out of five businesses (43%) did however identify rising operating costs as the biggest barrier in growing their business over the coming year, followed by weak demand (41%), and foreign and online competitors (29%).
“Businesses continue to face barriers to growth, with WA’s manufacturing and mining industries both reporting rising operating costs as a major hurdle to growing their business,” Mr Newnham said.
“For small retailers, WA’s weak population growth continues to lead to weak demand – this is single largest barrier to growth in retail trade.
“The State Government’s large deficit and net debt looms as a threat to WA’s economic recovery.
“For business confidence to turn into job creation, WA businesses need to feel confident that the State Government will maintain the current investment climate.
“The Government must keep its focus on reducing spending to tackle net debt, not introducing new or increased taxes, fees or charges to ensure that business confidence continues to improve in WA and more jobs are created.”
WA Super Chief Executive Officer Fabian Ross said this is incredibly positive news for the WA economy and our State.
“Supporting local businesses continues to be important factor in this upward trend,” Mr Ross said.
“I urge the WA local community to back WA businesses, which in turn will continue to build business confidence across our State.”
To view WA Super–CCI Survey of Business Confidence click here.