Western Australian businesses have reported a sharp increase in concern about global trade uncertainty, driving a slip in business confidence levels.
CCIWA’s Business Confidence report for the June quarter surveyed 473 WA businesses, finding one in five (19%) are concerned about international tensions harming their business, up from 9% six months ago.
The high cost of doing business remains the biggest barrier to growth, with seven in 10 (70%) reporting it as a concern.
Almost two thirds (64%) reported skills shortages as a barrier to business growth.
Short-term business confidence has dropped six percentage points since the last quarter, with just over one third (35%) of WA businesses expecting better conditions, while one quarter (25%) expect conditions to improve in the long term, down two percentage points.
CCIWA Acting Co-CEO, Aaron Morey, said uncertainty about where the US tariffs will land, and the escalating conflict in the Middle East, was dampening confidence across a wide range of sectors.
“WA is a trading economy and the knock-on effect of the US tariffs and retaliatory tariffs have the potential to weigh on our economy,” he said.
“Coupled with the Israel-Iran war, the impact on supply chains is a major concern for many businesses, with three in five (60%) WA businesses saying they expect their supply chains to be impacted by the tariffs.
“This shows that even those businesses that are not trade exposed are bracing for impacts to their operations as a result of the tensions.”
The Transport (80%), utilities services (73%), agriculture (71%) and resources (71%) sectors indicated the highest proportion of businesses showing concern.
Rising operating costs have again emerged as the largest barrier to business growth in WA.
Four in five (80%) of businesses surveyed said rising wage costs were their number one cost pressure, followed by increased insurance premiums (54%) and supplier costs (41%).
“Just as households have been squeezed by the cost of living, so too have WA businesses,” Mr Morey said.
“For small and family businesses, these costs can’t be easily absorbed and often can’t be passed on to the consumer, so many are having to make tough decisions about staffing levels and services.”
Small businesses are also more likely to be squeezed by government taxes, levies and charges, with 41% of small businesses reporting this in their top cost pressure compared with just 12% of large businesses.
“This really highlights the impact of payroll tax on small and medium sized businesses, with more of them now paying it due to bracket creep from wage increases,” Mr Morey said.
“WA has the highest payroll tax burden in the nation and the government is forecasting more than $6.2 billion in payroll tax revenue for the coming financial year.
“Payroll tax relief is one lever the government can pull to offer instant relief to small and medium sized businesses who are doing it tough.”
The June quarter revealed a four-percentage point increase in the number of WA businesses struggling to fill a position. More than three in five (64%) said they had struggled to find workers for a particular skill set.
The resources (82%), professional services (75%) and transport (70%) reported the most difficulty filling positions.
“Skills shortages are still a problem across the WA economy but despite the uptick in concern this quarter, it’s still significantly lower than the highs of two years ago,” Mr Morey said.
