According to the March quarter the South Australian Business Chamber William Buck Survey of Business Expectations, both business confidence and conditions have continued to rise in South Australia, with optimism remaining high for the third consecutive quarter.
South Australia’s business confidence has increased to 96.9 points, which is 13.2 points higher than the national average.
We believe a mix of positive economic news and activity brought about by a program of large-scale events held in South Australia has contributed to the sentiment.
The timing of the survey coincided with the announcement of the AUKUS project which is expected to bring $2 billion in infrastructure investment into South Australia over the next four years and billions more into the future, with total project costs estimated at $368 billion.
The confidence brought about by economic stimulus driven by events such as the VAILO Adelaide 500, Adelaide Fringe, Adelaide Festival, AFL Gather Round, and LIV Golf would also have had an impact.
Our survey revealed that 77.9% of business operators view large-scale events as beneficial to businesses in the state.
The General Business Conditions Index has also remained positive for three consecutive quarters, rising to 105.9 in the March quarter. However, while demand has remained steady this quarter, the total sales and revenue index only increased marginally by 0.3 points.
National data tells us consumers are reining in spending given rising interest rates and increased costs of living and businesses are starting to feel that impact here in South Australia.
Despite ongoing confidence and steady trading, businesses still expect some level of hardship on the horizon. According to the survey, 59.3% of respondents expect interest rates to continue rising, and 43.4% expect inflation to increase this quarter. While the feeling among economists is that inflation has peaked, the return to target level is expected to be slower than forecast, which creates uncertainty about the likelihood of another interest rate rise.
South Australia’s labour shortage continues to be an ongoing challenge for businesses, with 54.9% of respondents reporting labour shortages in the March quarter. As in the previous quarter, an overwhelming majority of businesses reported a lack of suitably skilled workers as the main reason for the difficulty in sourcing labour.
With unemployment in South Australia at a historical low, the tight labour market will likely continue for the foreseeable future. Reform of Australia’s migration system is critical to enable small businesses to bring in the workers they so desperately need.
The South Australian Business Chamber lodged a submission to the federal review late last year outlining that the South Australian business community needs a responsive and fit-for-purpose system, with the current system failing the business sector in multiple areas.
