Western Australian business confidence has reached its highest level in the September quarter since March 2013 – a five-year high.
The latest WA Super–CCI Business Confidence Survey conducted by WA’s peak business body, the Chamber of Commerce and Industry WA (CCI), is the only WA-specific index in the country, providing a snapshot of state-wide economic conditions and business expectations.
CCI Chief Economist Rick Newnham said business conditions in WA are continuing to improve, albeit at a gradual pace compared to the strong outlook around the rest of Australia, as the State’s economy continues to transition following the mining construction downturn.
“Some sectors, including WA’s renowned resources sector, are on the cusp of stronger growth, while those that are facing strong online competition and minimal growth, such as retail, continue to struggle,” Mr Newnham said.
“Two out of three businesses are expecting the economy to improve or stay the same in the short term, up six per cent since the June quarter. The margin between those that expect the economy to worsen (34%) and improve (31%) is also narrowing, signalling that more businesses believe economic recovery is on the way.
“Businesses are more optimistic about the future, with 54 per cent anticipating the WA economy to strengthen over the next 12 months, up 26 per cent from the same time last year. This is however down two per cent since the June quarter.
“Mining businesses continue to lead the growth in confidence in the WA economy, with every business surveyed in the mining sector expecting stronger economic conditions for the year ahead, unchanged from last quarter.
“Weak demand continues to be the biggest barrier to business, with one in three businesses (32%) identifying weak demand as the biggest barrier in growing their business over the coming year, closely followed by rising operating costs (28%) and the availability of skilled labour (24%).
“Businesses in health care (71%) and professional services (64%) also remain confident about economic conditions for the year ahead, however just 14 per cent of businesses in retail believe their economic conditions will improve.
WA retail is vital to our economy, with over 120,000 employees who contribute over $8 billion to the State’s economic growth and work over 160 million hours annually.
“Retail is being crunched from all sides by sluggish consumer demand, online competitors and the State Government’s restricted trading hours. Thirty-four per cent of retailers expect conditions to deteriorate over the coming year and over half (52%) are expecting no change in economic conditions,” Mr Newnham said.
“The State Government enforcing the most restrictive retail trading hours in the country is pushing shoppers online, hindering the State’s attractiveness as a global tourism destination and threatening WA retail jobs in the process.
“CCI urges the Government to commit to removing these unfair restrictions on WA local businesses to bring us in line with the rest of the country’s trading hours. As a first step, we urge the Government to review its decision to reduce extended Christmas trading hours by 30 per cent this year.”
WA Super Chief Executive Officer Fabian Ross said it is reassuring to see that that the WA business sector is at a five-year high, despite the challenges of wage pressures and labour costs. However, the difficulties being experienced in the retail sector is concerning.
“Being a local WA business ourselves, we continue to offer benefits for the WA population and the State through economic activity, employment and retention of skills. This is why we are proud to support other local businesses and encourage West Australians to do the same,” Mr Ross said.