CCIWA Chief Economist
Aaron Morey
Business confidence for the coming year has ebbed further, reaching lows last seen early in the COVID pandemic. CCIWA’s latest Business Confidence Survey – the only WA-based gauge of business sentiment – shows rising operating costs, wages and interest rates are eroding profitability for WA businesses.
In the short term, one in four WA businesses expect weaker economic conditions (23%). Over the next 12 months, two in five respondents (40%) expect the WA economy to deteriorate, an increase of 7 points. In total, the confidence of WA businesses in the economy has fallen 24 points since the post-COVID highs (Dec 2020).
The weakest sentiment was recorded among businesses in healthcare and social assistance (22%), agriculture (30%) and retail trade (31%). WA’s professional services sector is the most upbeat about our economy (67%), with optimism rising 17 points this quarter. The resources sector is also upbeat (57%).
WA’s skills shortages remain the biggest drag on confidence, citied by four in five (83%) businesses.
While the profitability of WA businesses has continued to fall away, labour costs and other prices soar. Nine in every ten respondents cited rising labour costs (87%), with wages being hiked an average 7%. Higher operating costs are most cited in the food services (91%), construction (87%) and transport (86%) sectors.
Nearly four in five WA (78%) of WA businesses report having to pass inflating costs on to their customers, or to delay projects (16%) and decline opportunities to bid for new work (11%).
WA businesses are seeking to adapt to ongoing uncertainty, through improved digital presence (47%), improved cyber security (28%) and action on ESG factors like ethical products (23%). In good news, concern about disrupted supply chains is beginning to ease.
