Regional business confidence continues to decline as the pressures of rising operating costs and ongoing labour shortages bite deeper, according to CCIWA’s June Economic Insight — CCIWA report.
“WA’s labour market remains incredibly tight and we’re seeing that play out more acutely in regional WA than in the city,” said CCIWA Acting co-CEO Aaron Morey.
“Overall concern about rising costs in the regions has eased slightly, down one percentage point since March and now at its lowest level in just over three years.
“While costs are still clearly a major concern in the regions, it’s pleasing to see the pressure has eased somewhat, due to easing inflation and interest rate reductions.”
Confidence trends
The report reveals uncertainty among regional businesses, with confidence in both short term and long-term outlook slipping.
Just 36% of regional businesses expect improved economic conditions in the next quarter, a decrease of four percentage points from March.
Conversely, 25% anticipate weaker conditions, reflecting an increase of eight percentage points.
The long-term outlook is also bleaker, with 30% expecting weaker conditions. This contrasts with metropolitan sentiment, where businesses generally report higher confidence.
Top barriers to growth
The greatest concern for regional businesses is still rising operating costs, identified by 67% of businesses as a barrier to growth.
While cost pressures have eased slightly since March, they remain a dominant concern, particularly in the Great Southern (77%), Mid-West/Gascoyne (75%) and Peel (74%) regions.
In addition, labour shortages continue to exacerbate operational difficulties, reported by 66% of regional businesses.
“The Pilbara (79%), Mid-West/Gascoyne (79%) and Great Southern (68%) regions reported the most difficulty filling positions,” Morey said.
Skills gaps and hiring struggles
The skills gap remains a major concern across the State, with 63% of regional businesses struggling to hire for a specific skill set.
Roles in demand include tradespeople, operators and chefs, with particular urgency in areas with high seasonal activity, such as the Pilbara and Mid-West.
A rapidly growing issue is the lack of housing for workers, which has risen to the third biggest barrier, as reported by 43% or businesses – up from 36% in March.
“This shows a clear divide between businesses in the regions and those in the city, where 15% of businesses highlighted it as a concern,” Morey said.
“Housing supply is a challenge right across the state but in our regional towns and cities, the tyranny of distance means housing is often a deciding factor for whether or not someone can take a job.”
CCIWA’s Economic reports, including Regional Pulse, are available exclusively to CCIWA Complete, Advantage and Corporate Members. For more see CCIWA’s Economic Insight page.
