Cost pressures and labour shortages have led to a sharp decline in business confidence in WA, dropping to their lowest level since the COVID pandemic.
CCIWA’s Business Confidence survey for the June quarter found a 10% drop in short-term business confidence since March – the biggest decline reported since June 2020.
Costs remain the biggest barrier to growth, with nearly eight in 10 (79%) of WA businesses identifying high costs as their biggest challenge – up 10-percentage points since March.
CCIWA Chief Economist, Dr Daniel Kiely, said the conflict in the Middle East and growing wage pressures have driven up costs across the economy.
“The impacts of higher costs have been felt across the community, by consumers and businesses alike,” he said.
“Higher costs have hit hardest in the resources sector, where 90% of businesses reported it as a barrier to growth, followed by real estate (89%) and retail trade (88%).
The survey found nearly half of WA businesses (49%) reported a moderate or large impact on their operations because of the conflict, while 45% reports minor disruptions.
To manage the higher cost of doing business, 58% said they were absorbing the extra costs through lower margins, while 49% were reducing spending and 42% were passing costs on to consumers.
“WA businesses are in a perfect storm of global economic headwinds and persistently high inflation,” Dr Kiely said.
“Whether it’s fuel supply, wage costs, supply chain disruptions or investment uncertainty, it’s clear the ongoing conflict has forced WA businesses to reassess their operations.”
Labour shortage emerged as the second largest barrier to growth, despite the State’s labour market continuing to loosen.
Finding staff was identified as a growth barrier by three in five (59%) WA businesses, down nine percentage points since March.
“While labour constraints have eased, they are still very high and have been for some time,” Dr Kiely said.
“We see the most concern in the agriculture, forestry and fishing sectors (73%) followed by construction (66%) and healthcare and social assistance (63%).
“Almost two thirds (65%) of WA businesses said they had struggled to hire for a particular skill set over the quarter.”
