Cost pressures faced by Western Australian businesses have hit their highest rate in five years, despite a slight recovery in business confidence.
CCIWA’s Business Confidence survey for the September quarter found eight in ten (80%) WA businesses reported rising costs as a barrier to growth.
The hardest hit industries were retail trade (89%), resources (88%) and construction (87%).
CCIWA Chief Economist, Dr Daniel Kiely, said the findings show the highest number of businesses suffering from cost pressures since the question was first asked in 2021.
“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,” he 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.
“Now is an ideal time to for the State Government to tackle payroll tax and provide some relief for WA businesses.
“More WA businesses are paying payroll tax thanks to wage cost increases, and CCIWA is calling for serious reform to reduce the impact of payroll tax on small and family businesses.”
Despite the growing concern about cost pressures, overall business confidence has recovered slightly after a sharp decline last quarter.
Two in five (40%) WA businesses expect conditions to improve in the next 12 months, up 15 percentage points from June.
“It’s great so 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,” Dr Kiely said.
While high costs continue to climb, there has been a slight easing in pressure on WA businesses from skilled labour shortages.
Almost three in five (56%) identified labour shortages as a constraint, down three percentage points from June.
Dr Kiely said some areas were still acutely impacted by skilled labour shortages.
“We see particularly in the agriculture, forestry and fishing sectors that 80% of employers have identified skilled labour shortages as a key barrier,” he said.
“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.
“The ongoing pressure from skills shortages really highlights the need for stronger policies around apprenticeships and traineeships.”
More than half (52%) of businesses highlighted Government regulatory and compliance requirements as a major barrier to growth, while 30% said they had been impacted by supply chain disruptions.
