Business confidence down amid labour shortages, rising costs

WA business confidence has edged down — reaching lows last seen early in the COVID pandemic — amid skilled labour shortages and rising costs, CCIWA’s latest Business Confidence Survey shows. 

The September report, released today, shows rising operating costs, wages and interest rates are the biggest issues eroding profitability for WA businesses.

READ THE BUSINESS CONFIDENCE REPORT 

In the short term, one in four WA businesses (23 per cent) expect weaker economic conditions, while two in five respondents (40%) expect the WA economy to deteriorate over the next 12 months — up 7 points. 

In total, the confidence of WA businesses in the economy has fallen 24 points since the post-COVID highs seen in Dec 2020. 

 The report found: 

  • The weakest sentiment was recorded among businesses in healthcare and social assistance (22 per cent), agriculture (30 per cent) and retail trade (31 per cent). 
  • WA’s professional services sector is the most upbeat about the WA economy (67 per cent), with optimism rising 17 points this quarter. 
  • The resources sector is also upbeat (57 per cent). 
  • Skills shortages remain the biggest drag on confidence, citied by four in five (83 per cent) of businesses.  

CCIWA Chief Economist Aaron Morey said while the profitability of WA businesses had continued to fall away, labour costs and other prices soared. 

Nine in every ten respondents cited rising labour costs (87 per cent), with wages being hiked an average 7 per cent. Higher operating costs are most cited in the food services (91 per cent), construction (87 per cent) and transport (86 per cent) sectors.   

Nearly four in five WA (78 per cent) of WA businesses report having to pass inflating costs on to their customers, or to delay projects (16 per cent) and decline opportunities to bid for new work (11 per cent).   

“WA businesses are seeking to adapt to ongoing uncertainty, through improved digital presence (47 per cent), improved cyber security (28 per cent) and action on ESG factors like ethical products (23 per cent),” Morey said. 

“In good news, concern about disrupted supply chains is beginning to ease.”

CCIWA’s Economic reports, including Business Confidence, are available exclusively to CCIWA Advantage and Corporate Members. For more see CCIWA’s Economic Insight page. 

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