Despite feeling the brunt of rising costs of doing business, South Australian operators are quietly optimistic about the future, according to the latest findings from the South Australian Business Chamber and William Buck December quarter Survey of Business Expectations, released today.
CEO of the South Australian Business Chamber, Andrew Kay, says, “Today’s results signal a gradually improving outlook for SA businesses, although our data indicates confidence levels still lag behind those of the same period last year.”
In the December quarter, South Australia’s business confidence rose by a modest 3.6 points to 87.5, compared to 91.2 in the corresponding survey period of 2022.
“Survey respondents overwhelmingly anticipate stable interest rates in the next quarter, and with indicators pointing towards lowering inflation, businesses are beginning to find some reassurance”, Mr Kay added.
General business conditions experienced a decline in the December quarter, falling to 90.7 points from 95.7 in the previous quarter.
“Businesses are feeling the impact of a slowing economy”, said Mr Kay. “December 2023 saw a decline in household spending, and Black Friday and Christmas trading did not meet the expectations of many businesses, particularly in the wholesale and retail sectors”.
Respondents to the Survey of Business Expectations, which has been tracking local business sentiment for 44 years, identified several issues businesses are currently faced with.
Costs of doing business such as wages, rent, and insurance are the top issues affecting South Australian businesses. It was chosen by 72.1% of businesses — a substantial 9.2 percentage points more than in September 2023.
Jamie McKeough — Managing Director, William Buck
Retaining second place for the wider South Australian business community was profitability/profit margins, chosen by 57.8% of respondents. While significant, its striking 14.3% gap from first place shows how vexing costs currently are for South Australian businesses.
“Businesses are grappling with a host of challenges, and the landscape keeps evolving, particularly with the influx of new industrial relations laws”, said Mr Kay.
“Rising wages and soaring energy prices are impacting profitability, especially for smaller businesses hesitant to pass on increased costs to consumers”, he added.
While certain data points in the economy appear promising, the vast majority of businesses are expressing concerns that should be a big worry for the state. With economic growth likely slowing in 2024, staying profitable and keeping costs down will be a significant challenge for many businesses.
Staff/skills shortages made the list of worries, retaining it’s third place as a prominent issue, chosen by 52.1% of respondents, which aligns with the 53% of businesses that reported currently experiencing labour shortages.
Government policies were chosen by 46.4% of respondents in fourth position, a 7.3% increase in just three months. The South Australian Business Chamber partly attributes this to the Federal ‘Closing the Loopholes’ Bill that passed parliament on 12 February 2024.
Interestingly, an issue mainly associated with the pandemic and its aftermath, freight and supply chain issues moved up the ranks, reported by 17.7% of businesses in this survey. The strike action and delays at shipping ports around the country may be a reason for this.
A further interesting finding is the fluctuations in respondents whose top issues include cybersecurity and digitalisation. Chosen by 23% in June, 15.2% in September, now almost doubling to 28.4% of respondents. The issue of cybersecurity and the number of businesses getting hacked continues to gain media attention. It seems that the realisation of the risk attached is beginning to resonate with business.
A further indication of challenging conditions is the proportion of respondents admitting nothing is a concern has more than halved in six months, from 5.2% in June 2023 to just 2.1% in December.
For a detailed breakdown of the December quarter results, visit sabusinesschamber.com.au/businessnow.
