Increased cost pressures and persistent skills shortages have dampened WA’s festive spirit, CCIWA’s final Business Confidence Survey for 2022 shows.
The report revealed business sentiment has receded to its lowest level since the beginning of the COVID pandemic.
In the short term, one third (33 per cent) of WA businesses expect weaker economic conditions. Looking ahead to 2023, more than two in five (44 per cent) respondents expect the WA economy to deteriorate, an increase of 4 percentage points.
In total, the confidence of WA businesses in the economy has fallen 29 points since the post-COVID highs of December 2020.
The lowest sentiment was recorded among businesses in:
- health care & social assistance (15 per cent);
- retail trade (17 per cent); and
- food services (22 per cent).
WA’s professional services sector remains the most optimistic, with 67 per cent expecting stronger conditions. The construction industry (50 per cent) also remains upbeat.
The report found finding workers remains the biggest impediment to WA businesses. Workforce shortages are cited by nine out of 10 businesses in WA’s professional services (92 per cent), resources (89 per cent) and retail (89 per cent) sectors. On average, WA businesses are trying to fill six vacancies.
In response, three in five businesses (59 per cent) are boosting their employees’ base wages.
“On average, WA businesses indicated they have increased base wages by just under 11 per cent as part of an annual wage setting process — up 4 percentage points from last quarter and significantly higher than Western Australia’s latest annual Wage Price Index of 3.3 per cent,” said CCIWA Chief Economist Aaron Morey.
“These cost pressures, combined with broader inflationary pressures, continue to damage business’ bottom lines. Meanwhile three in five businesses reported declining profit margins, with CCIWA’s profitability index remaining near record low levels.”
Morey added: “Facing risks of global inflation and geopolitical tension, our decision-makers should refocus on policy which encourages economic growth and resilience, in particular by lowering the burden of payroll tax in WA.”