Regional sentiment stays optimistic amid higher costs

CCIWA Chief Economist

Aaron Morey

 

Regional businesses are proving resilient in the face of ongoing cost pressures and workforce shortages. CCIWA’s latest Regional Pulse report shows sentiment in the regions has stabilised since December, though uncertainty sits on the horizon.  

 

One in four regional businesses (25%) expect the economy to improve in the year ahead, a leap of 11 points, while nearly half (47%) expect it to weaken, up 6 points. Optimism was highest in WA’s Mid-West/Gascoyne (47%), Pilbara (45%) and Goldfields-Esperance (45%) regions, reflecting conditions in both the mining and agriculture industries and signs that workforce shortages may have peaked. 

 

Concern about rising operating costs is now the number one concern for regional businesses. This concern is most widespread in the Great Southern (89%), Pilbara (83%) and Mid-West Gascoyne (80%) regions. Much of this is driven by higher labour costs, which are rising for four in five regional businesses (83%), a six-point increase.

 

While supply chain pressures eased dramatically for metro businesses, down 22 points to 34%, there was less relief for regional businesses. Two in five (39%) continue to experience supply chain issues, down 6 points. The upshot of these pressures is, amid inflation, wage pressure and a tight labour market, profit margins are declining for more than half (54%) of regional businesses.  

These businesses need relief, and the most direct way support can be provided is by reducing WA’s high payroll tax burden. Ahead of the State Budget, expected to confirm a strong financial position, CCIWA encourages the Treasurer to ensure WA businesses no longer bear the highest payroll tax burden in the country.

 

The full Regional Pulse Report is available to CCIWA members 

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