South Australian business confidence has displayed a slight rebound in the September quarter after a significant decline in June.
According to the latest the South Australian Business Chamber, William Buck Survey of Business Expectations released today, confidence levels rose to 83.9 points, bouncing back from 77.3 three months earlier.
In June, the South Australian Business Chamber survey projected a further decline in business confidence to 68.4 points for the September quarter, reminiscent of challenging periods like the peak of COVID-19 and the Global Financial Crisis.
Andrew Kay, Chief Executive of the South Australian Business Chamber, suggested that interest rate stability since the last survey had contributed to the improved result, noting results were collated before the Melbourne Cup Day rate hike.
“These are quite globally turbulent times. A brief period of certainty around local interest rates was welcomed by the business community,” said Mr Kay.
The confidence index, tracked by the South Australian Business Chamber for over 43 years, measures South Australian businesses’ expectations for the state and national economies over the next 12 months.
Additionally, general business conditions in South Australia increased in September, with indices reflecting a 9.1‑point increase from 86.6 in June. “This result surpasses everyone’s expectations,” said Mr Kay. “Businesses anticipated a rise of 4.9 points last quarter, so this is promising news.”
This increase starkly contrasts the June quarter conditions, which saw a significant 19.3‑point decline. Mr Kay highlighted the volatility businesses are navigating, emphasising the challenge for long-term strategic planning and underscoring the necessity for adaptability and agility among operators.
The quarterly survey, which is essential for informing the South Australian Business Chamber’s advocacy, addressed the concerns keeping business owners awake at night. At the peak of these concerns was the cost of doing business, with nearly two-thirds of respondents worried about costs and profitability.
“Rising business costs, particularly materials and overheads, have surged to multi-decade highs,” said Mr Kay.
“Increases in energy prices, insurance premiums and borrowing costs have been higher than expected. The Reserve Bank’s latest interest rate rise will further challenge business owners, especially in discretionary sectors like retail and hospitality. Many will be hoping for a bumper festive season to pull them through,” he added.
Beyond cost concerns, the survey highlighted the ongoing need for skilled labour and an emerging issue around workplace culture, wellbeing, and mental health issues, with 23% reporting concerns during the quarter.
Pictured: Jamie McKeough, Managing Director — William Buck
Analysed by Jamie McKeough – William Buck
1. Costs of doing business
2. Profitability and profit margins
3. Staff and skills shortages
4. Government policies, legislation and compliance
5. Economic factors (inflation, interest rates, consumer demand)
The Top 5 issues are consistent with the June quarter. It looks therefore like the consumer side cost of living pressures are yet to be ringing alarm bells among many business owners and operators (other than those directly relying on consumer discretionary spending), who appear to be more worried about their own financial performance. It will be interesting to see if economic factors begin to creep up this list as households come under further pressure.
The available workforce remains a key stress point for SMEs, although to a lesser degree than in the previous quarter. 55% say they are currently experiencing a labour shortage (down from 60% in June Qtr.). 46% say a lack of suitable skilled workers is the biggest labour challenge.
That said, 70% expect their sales and revenue to stay the same or rise in the upcoming quarter and more than 60% predict this outcome for profitability.
Surprisingly, only 15% say cybersecurity is keeping them awake at night. This result is very surprising given the devastating short and long-term effects a cyber-attack can have. Most of us know someone who has been the victim of cybercrime.
In terms of business growth, 68% expect their growth to be generated organically over the next 1 – 2 years while 39% expect to see business consolidation within their industry in that time. 1 in 5 businesses expect to be a purchaser, 1 in 5 a vendor, and 3 of 5 neither.
Access to labour, lack of capacity and infrastructure and size of the market were the top 3 (in order) constraints to growth identified by survey respondents.
28% say digital disruption within their industry is driving business growth while 15% say it’s having the opposite effect.
Almost all (95%) reported a rise in insurance premiums since 2020 and 19% had experienced problems obtaining coverage during this time.
Click here for a comprehensive analysis of the South Australian Business Chamber, William Buck September 2023 quarter Survey of Business Expectations.
