Western Australian business confidence has continued its downward march over the June quarter, with long-term confidence hovering just above pandemic lows. CCIWA’s Labour Cost Index for the upcoming quarter increased to its highest ever, soaring up by 5.5 percentage points since last quarter.
The soaring cost of doing business dominates again as the main drag to business confidence, with four in five (79%) businesses indicating this as a barrier over the next 12 months – up 4 percentage points since last quarter. Skilled labour shortages also continue to dampen confidence, with 75 per cent of businesses indicating they are struggling to hire a worker.
To manage labour shortages, businesses continue to offer larger pay packages to attract and retain their workforce – with businesses increasing or planning to increase their base wages by an average of 11 per cent.
In addition to these factors, WA businesses are increasingly grappling with weak consumer demand as a result of persistent cash rate hikes and inflationary pressures – with a further 9 per cent of WA businesses reporting this as a barrier to growth this quarter, up to a total of 26 per cent. This is the first sign of the coming slowdown in local retail and hospitality markets.
