Survey shows 'lowest' profit drop since the pandemic
Despite the slight relief from the pandemic, profits of Western Australian (WA) businesses have declined to the lowest level since the start of the pandemic, the Chamber of Commerce and Industry WA (CCIWA) Business Confidence Survey showed.
The CCIWA Survey for the June quarter showed that the combined cost of labour and supply chain issues constrained profits across a range of sectors.
“Despite the sustained burden businesses are on average passing on just under half of their costs to customers,” the CCIWA said in a media release.
WA Business Confidence
Despite the profit plunge among the WA businesses, the CCIWA survey showed a slight increase in confidence, with 45% of the businesses anticipating that conditions will improve in the next three months.
The survey also showed optimism improved for the next 12 months but only for three out of ten businesses.
“WA business confidence has edged up over the June quarter, underpinned primarily by the removal of WA’s COVID-19 restrictions and hard border controls,” the CCIWA said.
“While confidence has improved, it remains well below survey highs recorded across 2021, as businesses continue to grapple with skills shortages, rising cost pressures, and ongoing supply chain disruptions,” it added.
Regarding the workforce issue, the CCIWA survey showed that more than 4 out of 5 businesses are struggling to fill a skilled position, given the current pressure to raise the wages of existing employees.
Aside from the skills shortages, the supply chain situation, primarily driven by the current geopolitical tensions, also pulled down the business confidence of WA Businesses, the CCIWA said. Moreover, it also noted that most businesses struggled with the increased cost pressures.
“Three-quarters (76%) of businesses surveyed are suffering higher material costs - up 8 percentage points - and 66% are experiencing delayed delivery of materials,” the CCIWA survey showed. It further said that the ambiguity over interest rates adds to the burden for WA employers.
“For example, if the cash rate were to rise to 3 percent, then half of businesses indicate they would look to cut back spending, abandon proposed projects and limit hiring new staff,” the CCIWA said.
Given the significant challenges that WA businesses face, the CCIWA called for the government’s action to help ease the cost of doing business.
“The most direct way to ease costs for business in Western Australia is to lower the significant burden of payroll tax,” the CCIWA said.