Confidence among WA businesses remains steady, while they continue to endure high operating costs, but labour shortages show signs of relief.
CCIWA’s Business Confidence Survey from March 2023 shows business confidence rose marginally over the past quarter.
The long-term shows a similar scenario, with confidence for the next 12 months picking up. However, long-term expectations continue to remain much lower than the three-month outlook, which has been consistent for three years.
“The soaring cost of doing business is now the number one barrier to growth in WA. Yet business confidence is holding firm, amid signs that labour shortages have finally reached their peak,” said CCIWA chief economist Aaron Morey.
“The WA economy compares well with others nationally and globally, however the mounting pressures make WA’s high tax on jobs, especially on medium-sized businesses, hard to justify. CCIWA encourages the State Government to use its strong financial position to provide modest but impactful relief, by introducing a $1.3 million threshold and a rebate for businesses up to $7.5m.”
Barriers to business growth
Rising operating costs have narrowly surpassed skills shortages as being the main barrier to business growth, as indicated by three of four (75%) businesses.
Skilled labour shortage was the number one hinderance to business growth for several years but has dipped by six percentage points in the past three months to its lowest point since September 2021. This suggests skills shortages have peaked and tight labour market conditions have eased slightly.
Supply chain disruptions are down considerably from December 2022, showing a continual downward trend over the past 12 months. One third (34%) of businesses reported supply chain issues as a growth barrier. This is down by 16 percentage points from the last quarter and reflects a large drop from the peak of 60% in March 2022.
On the lower end of the scale, weak demand and access to finance continue to have the lowest impact on business growth.
Business barrier by sector
The food services sector reports as being the most affected by rising operating costs, as all (100%) respondents indicated this as a barrier. Other industries identifying high operating costs as a barrier include professional services (92%), wholesale trade (91%) and retail trade (88%).
Skilled labour shortages, the second largest barrier, was most prominent in education and training (93%), resources (87%) and manufacturing (87%).