✦ The final Business Conditions Survey of the year has now been released, revealing a forecast 11% drop in Christmas trade across the state. Business NSW CEO Daniel is urging the public to get out there and support our local businesses this festive season.
Businesses have been facing a range of economic challenges throughout the year. These challenges include increasing costs, shortages of workers and skills, the impact of higher interest rates, and weakening customer demand.
While some parts of the economy have shown resilience, overall business confidence has been low due to an uncertain economic outlook, which has been further complicated by recent conflicts in the Middle East.
Official forecasts from the NSW Government and Reserve Bank of Australia suggest that economic activity will remain sluggish in 2024.
The latest quarterly Business Conditions Survey, conducted from 29 October to 13 November, received a total of 845 responses from various industries and regions in NSW. It's important to note that the RBA announced a 25-basis point increase to the cash rate on 7 November, which is the 13th rate hike in the current tightening cycle. The report below highlights the key differences in survey findings before and after the rate hike.
Key Findings
The headline Business Confidence Index has improved to -57.6 in the last quarter of 2023, the highest reading in three quarters. The cohort that completed the survey after the RBA rate hike had a confidence level of -66.2, notably lower than the confidence level of -52.1 for those who submitted their survey responses before the rate hike.
Christmas trading is expected to fall on average 11% this year compared to last year. Businesses in two regions (Hunter Valley and Far West and Orana) are anticipating a decline in excess of 20%.
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Interest rate concerns have intensified, especially following the latest RBA rate hike. Businesses remain most concerned about customer demand.
Insurance and energy are again the top two business cost concerns, followed by taxes, levies and other government charges.
71% of businesses have sought information and advice on how to manage energy costs or energy use. Businesses are most interested in energy provider comparison services, deals and offers.
The cost of doing business is the largest barrier to achieving higher profit growth and business expansion.
For businesses that have invested in lifting productivity, the most common approach is staff training, followed by machinery and equipment and IT programs.
Across NSW, most businesses (63%) intend to maintain the same staff headcount for the next 3 months. However, there are regional variations. In the Far West & Orana, 43% plan to cut staff.
(Source: Business NSW Dec 2023)
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