WA firms most concerned about cost of doing business, new CCIWA confidence survey shows

The cost of doing business is now the biggest concern for WA businesses, replacing skilled labour availability and supply chain disruption at the top of the list.

Three-quarters of the State’s businesses consider higher cost pressures will be a barrier to growth over the next year, the latest business confidence survey by the Chamber of Commerce and Industry WA reveals.

Four in five WA businesses reported rising labour costs.

“One in six WA businesses has been put at risk by rising interest rates,” chief economist Aaron Morey said. “Repayments now either equal or exceed turnover of 15 per cent of respondents.”

Mr Morey said 71 per cent of respondents to the chamber’s quarterly survey said they had no other option but to pass higher prices on to consumers, while almost one-third were having to draw on their own savings.

Others reported delaying prospective or existing projects and avoiding tendering for new work. Just over 10 per cent said they had laid off staff.

“The WA economy compares well with others nationally and globally,” Mr Morey said. “However the mounting pressures make WA’s high tax on jobs, especially on medium-sized businesses, hard to justify.”

He said though workforce and skills gaps remained acute, 75 per cent of businesses reported it as an issue — the lowest reading since the onset of the pandemic three years ago.

“This is a sign the shortages have peaked,” Mr Morey said.

To compensate, three in five businesses indicated they had boosted employee base wages at an average rate of 11 per cent.

Otherwise, almost 60 per cent were continuing to upskill existing employees, particularly in the transport and education sectors. Just over half said they were taking on more apprentices or trainees, particularly in professional services, manufacturing and construction.

It comes as WA unemployment increased and job vacancies decreased, showing the worst of the jobs crunch is over, though some industries remain struggling.

Supply chain disruptions were a barrier to growth for one-third of respondents — a slide of 16 percentage points in three months, a sign of further easing and that businesses had adapted their supply chains, Mr Morey said.

Elsewhere, 56 per cent of businesses said they had posted a fall in profit margins, keeping the CCIWA’s profitability index at near-record lows — where it has been for the past year.

Nearly one in five worry that weak demand, amid higher interest rates forcing a change in consumer behaviour, will reduce turnover.

Despite the concern, short- and long-term optimism edged higher in the quarter, with the professional services, agriculture and transport sectors the most confident. Real estate services and wholesale trade are the least confident.

The Chamber is again urging the State Government use its large surplus to provide what Mr Morey described as “modest but impactful relief” by changing business tax thresholds to $1.3 million, and a rebate for businesses up to $7.5m.