CCIWA Chief Economist
Aaron Morey
Squeezed by rising costs and skills shortages, just one in ten regional businesses have seen their profits lift in WA this quarter. The latest CCIWA Regional Pulse Report shows the outlook among regional businesses has darkened in comparison to businesses in the city, as overall confidence declines.
Two in five (41%) regional businesses believe the economy will improve in the next three months, down 6 points.This compares to 44% among metro businesses.
In the longer term, expectations of a weakening economy grew by five points (39%). These fears were most widespread in the Great Southern (55%) and South West (43%).
Across the regions, just one in five (21%) businesses expect better conditions over the coming year. The persistent strength of the resources sector sees mining regions like the Pilbara (46%) and Goldfields-Esperance (48%) retain their brighter outlook.
A mere one in ten regional businesses saw improved profits this quarter (10%). Three in five (59%) saw their profits decrease instead, up five points.
Higher costs and WA’s skills crisis remain the biggest impediments to regional businesses.
Concern about rising operating costs remain acute across all regions, impacting four out of five businesses (79%) especially the Mid-West/Gascoyne (91%) and the South West (89%).
Four out of five regional businesses (82%) report being impacted by WA’s skills crisis.
A similar proportion faced rising labour costs including wages this quarter (85%), up five points. Looking ahead, further increases are expected in the South West (89%), Wheatbelt (88%) and Pilbara (85%) regions, even higher than the Perth metro area (74%).
Regional businesses are under strain to meet demands for higher wages while their profits decline. The best way for the State Government to provide relief would be to ease the burden of payroll tax, which would also improve our competitiveness with other States. We also encourage the Commonwealth to make it easier to bring in skilled workers from overseas.
