Illawarra businesses are continuing to experience the worst business confidence levels in two years and that is now starting to impact on their previously more upbeat view of the future, according to the latest NSW Business Chamber and Commonwealth Bank Business Conditions Survey.
The NSW Business Chamber and Commonwealth Bank NSW Business Conditions Survey of Illawarra businesses found:
- 32% of Illawarra businesses said they thought the current performance of the NSW economy was weaker than in the previous quarter. This more than outweighed the 22% who said it was stronger. Looking ahead, the number of respondents who expect the economy to weaken further (26%) still outnumbers those that expect to see some strengthening (25%) next quarter;
- 26% of Illawarra businesses said business conditions declined in the current quarter, which more than offset the 24% who reported an improvement in conditions. Expectations for the next quarter are still negative with 26% expecting further declines, compared to 25% expecting some improvement.
- 35% of businesses reported increased sales this quarter but this was counteracted by 34% who reported a decrease in sales. The outlook is more positive with 35% of businesses expecting sales revenue to increase in the coming quarter and 29% expecting sales revenue to decrease;
- 38% of businesses reported a deterioration in profitability, compared to only 24% who reported an improvement. 32% expect a deterioration in profitability in the coming quarter (compared to 29% who expect an improvement); and
- 30% of businesses report a tightening of access to finance and 23% expect a further tightening in the coming quarter.
- One of the few measures where the number of positive respondents outweighed the number of negative responses was in relation to employment. 17% of respondents said they had expanded their workforces in the past three months, which more than offset the 11% of respondents who said the number of employees in their workforce had declined. Looking ahead, Illawarra businesses are slightly less positive about the employment outlook for the next three months – with 12% expecting to expand their workforce and 9% saying they expect reductions in their workforce.
“The Illawarra businesses we’ve surveyed every quarter over the past few years have always maintained an optimistic outlook for the next quarter, even when they have reported that current conditions are soft. But that has clearly taken a turn for the worse in this latest survey, which is a great concern,” said Mike Leask, CEO of the Illawarra Business Chamber.
“The Illawarra economy is feeling the effects of subdued consumer confidence, an uncertain global economic outlook and a high Australian dollar.
“While there appears to have been a slight improvement in sales for some businesses last quarter but that did not translate into stronger profits – amid a very competitive business environment in the face of subdued consumer confidence and the high Australian dollar.
“This is a tough time to be in business and no one should underestimate the need for businesses to buckle down and look at opportunities to innovate and reduce costs until the economy picks up.
“The results of our survey once again bring in to question the logic behind the Federal Government’s push for a carbon tax this year. While Australia may be one of the few strong economies after the GFC, it would seem foolhardy to throw that advantage away on a policy that will have no impact on global carbon emissions, particularly when it will have a significant impact on the Illawarra economy.
“The feedback from business is that the introduction of the carbon tax will see a stampede of businesses exporting Australia’s carbon emissions and jobs offshore - a result no one, including the Government, would want to see,” concluded Mr Leask.