The confidence of WA businesses for the coming year has recorded its sharpest fall on record, plunging to a three-year low. In the only WA-specific index of the economy and snapshot of business expectations, the WA Super–CCIWA Business Confidence Survey highlights the business community’s fears that the bleak economic conditions will last beyond the ‘hibernation’ phase.
Almost every WA business (91 per cent) expects to feel the impacts of the virus and six in seven (86 per cent) expect current conditions to persist, or get worse in the short term. Critically, three in five (61 per cent) expect the WA economy to continue to worsen into 2021, a 40 percentage point surge since last quarter. This is the sharpest fall in the 12-month outlook on record, with the number of businesses expecting better conditions also down by 24 percentage points.
Every sector of the WA economy has reported heightened concern about future economic conditions, with a higher proportion of businesses in agriculture (93 per cent), retail (83 per cent), and accommodation and food services (67 per cent) expecting weaker economic conditions over the next twelve months.
Profit expectations disintegrated this quarter, falling to the lowest level on record. And expectations of job opportunities recorded the biggest quarterly fall on record. Almost all retail businesses (91 per cent), construction businesses (83 per cent) and manufacturing businesses (78 percent) expect their workforce levels to be stagnant or shrink in the next three months.
WA Super CEO Fabian Ross says we are in “uncharted territory”.
“Every day brings with it significant change and uncertainty,” Mr Ross said. “But just like superannuation, we need to maintain a long-term view, because long-term thinking is critical for businesses right now. It is my view that we will get through this crisis, and knowing how resourceful WA people are, we will see new opportunities and innovations arise.”
These results show overall confidence in the economy falling to levels marginally higher than during the Global Financial Crisis (2008-09). The survey closed shortly before the escalation of containment measures to ‘Stage 3’ and we therefore expect business confidence to fall further in coming months.
The total impact of COVID-19 on the WA business community will be profound. Containment measures are necessary to control the spread of the virus and CCIWA will continue to work closely with government to support the economy within these constraints – building on important measures such as JobKeeper and payroll tax relief – to protect jobs and safeguard businesses into the recovery phase.
Read the full report here: WA Super – CCIWA Business Confidence Survey Report
CCIWA Chief Economist Aaron Morey
