Surging costs drag down business confidence in WA

WA businesses continue to be battered by rising operating costs, with nearly 80% of respondents to CCIWA’s latest Business Confidence Survey citing this as a major growth barrier. 

CCIWA’s June quarter survey shows the increased cost of doing business – overall, up four percentage points from the previous quarter – especially worries the resources (100% of respondents citing this as a barrier), construction (88%) and manufacturing (87%) sectors. 

READ THE BUSINESS CONFIDENCE REPORT

Just 30% of WA businesses believe conditions will improve over the next three months, down five percentage points from last quarter. And only 16% expect the WA economy to improve over the next 12 months, down seven percentage points. 

“Confidence has declined further among WA businesses, continuing a two-year slide since the post-pandemic peak of June 2021,” says Aaron Morey, CCIWA Chief Economist. 

The spectre of weak demand – WA’s leading barrier to businesses pre-COVID – also crept back, mentioned by one in every four businesses (26%), an increase of nine points.  

“Businesses in the retail sector are particularly concerned with falling demand.” 

Labour still tight 

Sourcing workers remains a persistent issue for WA businesses, as labour market conditions are unchanged since the March quarter with 75% of businesses struggling to hire a particular skillset. 

With an average of six vacant positions in a WA business, three in five (56%) are boosting base wages or providing one-off rewards such as retention bonuses (20%). 

Around half are improving their digital presence (52%) or adopting new technology (46%) such as artificial intelligence. 

Inflation and interest rates 

Persistent inflationary pressures and rising interest rates are forcing 74% of businesses to increase consumer prices to help mitigate the costs. 

Just over two in five (43%) respondents say their turnover still comfortably covers their interest repayments, down six percentage points from the March quarter.  

However, 8% say their turnover and interest repayments are now about equal and about 6% indicate interest repayments exceed turnover, up two percentage points from last quarter. 

Cost pressure relief 

One of the best ways the State Government can help rein in the cost pressures is providing immediate payroll tax relief, says Morey. 

WA’s tax on jobs places a particular burden on medium-sized and family businesses, the very businesses we hope will grow into WA’s sectors of the future,” he says. 

“WA needs to act now to shed its mantle as the highest payroll tax jurisdiction for SMEs in the country.” 

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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