In times of political uncertainty as we barrel towards the South Australian elections, the The South Australian Business Chamber – Statewide Survey of Business Expectations shows confidence continues to head in the right direction despite owners and operators not knowing who could lead our great state from late March.
Hesitation underlines South Australia’s trading conditions, but businesses are performing better than anticipated. It’s not just green shoots any more – the grass is growing – but business owners are wary that the rain might not come to water our economic lawns.
Confidence in the South Australian economy is rising. It has hit 98.4 points — up 13.3 points since the September quarter and 12.6 points compared to the December quarter two years ago. Since the GFC it has only passed 100 twice – in September 2012 and in mid-2016. But it still hasn’t returned to the mid-point of 100.
When an election nears confidence generally falls as uncertainty rises – which you would expect to see given no-one can safely predict whether Steven Marshall and his Liberal Opposition will finally break their 16-year drought, whether Jay Weatherill will rain on their parade yet again, or if Nick Xenophon and SA Best will cause an absolute deluge.
But the latest survey exceeds expectations. Our survey participants in September expected general business conditions to rise to 99.6 points, yet they grew to 110.2. Total sales revenue was also above expectations – anticipated to be 109.1 but reported as 113.4. That means our businesses are slowly turning over more products and services, and generating more revenue at the same time.
We had our rally against arbitrary bank taxes in the June quarter, and now operators are telling us they’re getting on with what matters most – boosting their business.
Gazing up at the economic blue sky, our business owners are looking for a few clouds and signs of light rain to water their growing grass, and there-in the hesitation lies. They still need their sprinklers.
More than 60 per cent of our respondents are expecting labour costs to rise, 41 per cent think the unemployment rate will rise, and a staggering 97 per cent think inflation will stay the same or increase. More than half saw their overheads go up in the December quarter, and 45 per cent saw the cost of materials increase.
South Australians are generally more pessimistic about the South Australian economy than the national economy as well – which may be a reflection of how we feel about our politics at the moment. National confidence has hit near-record heights of 129.6, up 15.9 per cent on last quarter and 28.2 per cent on two years ago.
Our businesses are telling us it’s time to proceed with caution. Which is a fair call until we know what to expect after March 18.
This article was first published in the South Australian Business Journal on Tuesday 27 February 2018.
