Business confidence in regional Western Australia has taken a hit as we head into 2024, with the rising cost of doing business remaining the biggest barrier to growth.
CCIWA’s Regional Pulse found fewer businesses were optimistic about the short and long-term outlook in the December quarter than they were in September.
Three in 10 (28%) said they expected conditions to improve in the next three months, down four percentage points since September. 32% expected conditions to weaken while 40% believed they would stay the same.
Businesses in the Pilbara and the Goldfields-Esperance regions were most optimistic, with 62% in the Pilbara and 39% in Goldfields-Esperance expecting short term conditions to improve.\
CCIWA Chief Economist, Aaron Morey, said the optimism was likely driven by strong commodity prices.“The price of iron ore rose by around 15% in the December quarter, while the gold price recovered to hit a record high,” he said.
Businesses in the Kimberley were the most pessimistic, with only 17% expecting stronger conditions over the next three months.
“This is likely reflecting the decline in economic activity over the wet season and ongoing challenges in attracting labour”, Mr Morey said.
In the Wheatbelt, 18% expected conditions to improve in the next quarter, compared with 24% in the Mid-West/Gascoyne, 26% in the Great Southern and 29% in the South West.
Overall, regional businesses were more pessimistic about the short and long term outlook that those in the Perth-Peel region.
Businesses across the WA economy report they are being squeezed by rising costs.
Three in four (75%) regional businesses say rising costs are a barrier to growth, although this number has dropped by nine percentage points since the September quarter.
“Rising costs, driven by inflation, are the key challenge across the WA economy. This is exacerbated by the fact that WA has the highest payroll tax burden in the country,” Mr Morey said.
“There’s not much the State Government can do to tackle inflation, but it is within their power to offer some relief to those businesses who are hit by the tax on jobs and success.”
Labour shortages remain a significant challenge in the regions, with almost seven in ten (68%) businesses reporting the availability of skilled labour as a barrier to growth, up three percentage points since the September quarter.
This was most prevalent in the Pilbara, where 81% of businesses reported it as a barrier, and the Kimberley, where 74% said it was a challenge.
The Regional Pulse survey also asked businesses if they had challenges filling a specific role over the December quarter.
80% of businesses in the Mid-West/Gascoyne regions said they were struggling to fill specific roles, followed by 79% in the Pilbara, 78% in the Goldfields-Esperance, 77% in the Kimberley, 59% in the South West, 59% in the Wheatbelt and 53% in the Great Southern.
“Right across the regions were seeing skills shortages in a range of areas, including technicians and trades, electricians, mechanics, construction workers and salespeople,” Mr Morey said.
