Western Australian business confidence has shown signs of recovery, but businesses continue to face mounting cost pressures, skills shortages and regulatory challenges.
“It’s great to see some optimism returning to the outlook for WA businesses, but it’s important to note that confidence is still in negative territory, sitting below 100 on the longer-term index,” said CCIWA Chief Economist Dr Daniel Kiely.
Cost pressures continue to climb
An overwhelming 80% of WA businesses said rising costs was a barrier to growth, the highest level recorded since CCIWA began tracking the measure in 2021.
Retail trade businesses reported the greatest pressure, with 89% identifying costs as a challenge, followed by resources (88%) and construction (87%).
“Households and businesses alike have been squeezed by inflationary pressures which have been compounded by the conflict in the Middle East, and that pressure shows little sign of easing,” Kiely said.
“Inflation has been stubbornly high for some time despite multiple cash rate hikes and coupled with a further interest rate rise this week, we expect cost pressures to continue to weigh on WA businesses.”
CCIWA is continuing to call for payroll tax reform, with more businesses being captured by the tax as wages increase.
“Now is an ideal time for the State Government to tackle payroll tax and provide some relief for WA businesses,” Kiely said.
Labour shortages remain a concern
While workforce pressures have eased slightly, more than half of WA businesses (56%) still identified labour shortages as a barrier to growth.
Some industries continue to face significant challenges attracting and retaining workers, particularly agriculture, forestry and fishing, where 80% of employers reported skills shortages as a key barrier.
“This is still a very high number, and likely to be made worse by proposed changes to visa arrangements that would restrict backpackers who work in these industries,” Kiely said.
“The ongoing pressure from skills shortages really highlights the need for stronger policies around apprenticeships and traineeships.”
Regulation and supply chains still impact growth
Businesses also continue to face pressure from regulation and compliance requirements.
More than half of WA businesses (52%) identified government regulation and compliance requirements as a major barrier to growth, while 30% reported being affected by supply chain disruptions.
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