Aaron Morey
Chief Economist
Business confidence in Western Australia has hit a 13-year high on the back of soaring iron ore prices, progress on a global COVID-19 vaccine, record low interest rates and WA safely re-joining the national economy, according to CCIWA’s Business Confidence Survey – the only independent, WA-specific snapshot of business sentiment.
WA hasn’t seen business confidence at these levels since 2007. Optimism within the resources sector was widespread, with four in five businesses (80%) anticipating stronger conditions as iron ore prices surge. Industries reliant on mining, such as manufacturing, shared in the optimism (61%), while only one third (33%) of WA retail businesses had a positive outlook. Overall, three in five WA businesses (61%) expect the economy to improve in the next three months, with the outlook better still across the year (66%).
For the first time on record, skills shortages are the number one issue dragging on confidence for WA businesses (35%). More than half of WA resources businesses (52%) cite skills shortages as their biggest barrier to growth, a 20-point increase since last quarter.
These results also show that WA’s economy has never been more reliant on a single sector.
In this edition of the CCIWA Business Confidence Survey, we identified the extent to which industries in Western Australia rely on the mining sector. Two out of three businesses in construction (67%) and more than three in five in real estate (62%) reported being reliant on the success of the mining sector to a “high” degree.
And while resources now make up a record 43% of our economy, WA’s resources businesses report that an average 40% of their annual revenue is dependent on trade with China. In sectors like retail and manufacturing, respondents said one fifth of annual revenue is reliant on China.
At a time of global trade tensions, the need for our economy to diversify has never been clearer. More competitive payroll tax settings would loosen the restraints on medium-sized WA businesses with scope to grow, particularly in manufacturing.
The results also highlight the imperative to sustain sensible border arrangements with the rest of Australia. When WA businesses were asked about the importance of an eased border with other States, 73% in accommodation and food nominated Victoria, 63% in construction identified New South Wales, 47% in manufacturing nominated Queensland, and 48% in resources identified South Australia as important to conducting their business.
Read the full CCIWA Business Confidence Survey report here.
