Western Australian business confidence has dropped to its lowest level since COVID, with persistent cost pressures, skills shortages and impacts of the Middle East crisis creating challenges for employers.
CCIWA’s June Business Confidence Survey revealed a 10% drop in short-term confidence for the previous quarter and the biggest decline since June 2020.
Around half of the businesses reported a moderate or large impact from the higher fuel prices, while 45% indicated minor disruptions.
“WA businesses are in a perfect storm of global economic headwinds and persistently high inflation,” CCIWA Chief Economist Dr Daniel Kiely said.
“Whether it’s fuel supply, wage costs, supply chain disruptions or investment uncertainty, it’s clear the ongoing conflict has forced WA businesses to reassess their operations.”
Costs continue to bite
Nearly 80% of businesses said high operating costs was their biggest growth barrier – up from 69% in March.
“The impacts of higher costs have been felt across the community, by consumers and businesses alike,” Kiely said.
“Higher costs have hit hardest in the resources sector, where 90% of businesses reported it as a barrier to growth, followed by real estate (89%) and retail trade (88%).”
Businesses have been mitigating costs by:
- 58% absorbing extra costs through lower margins
- 49% reducing spending
- 42% passing costs on to consumers
Workforce constraints persist
Despite the State’s labour market loosening, 59% said labour shortages were the second most prominent growth barrier. This was a drop from 68% since March.
“While labour constraints have eased, they are still very high and have been for some time,” Kiely said.
“We see the most concern in the agriculture, forestry and fishing sectors (73%) followed by construction (66%) and healthcare and social assistance (63%).
“Almost two thirds (65%) of WA businesses said they had struggled to hire for a particular skill set over the quarter.”
Our Economic reports, including Business Confidence, are available exclusively to CCIWA Complete, Advantage and Corporate Members. For more, see CCIWA’s Economic Insight page.
