Business confidence in South Australia has fallen to its lowest level since the peak of the pandemic, according to the latest Business Expectations Survey.
The result comes as businesses report cost pressures, supply chain disruption and weaker trading conditions.
The survey, conducted by the South Australian Business Chamber in partnership with William Buck, shows confidence in both the state and national economies has also declined.
Business profitability has fallen to a 20-year low, while business conditions and sales are at their weakest levels in six years. Respondents expect conditions to deteriorate further in the next quarter.
Andrew Kay, CEO of the South Australian Business Chamber, said businesses are managing a range of pressures across their operations.
“South Australian businesses are being squeezed from every direction – fuel costs, freight disruption, inflation, and softening demand.”
Survey results show concerns about freight and supply chains increased during the quarter, driven by higher costs and uncertainty linked to conflict in the Middle East. Higher fuel prices have also increased transport and input costs and disrupted deliveries and staff travel.
Kay said many businesses are deciding whether to absorb costs or pass them on to customers, who are also under cost-of-living pressure.
“What we’re seeing is businesses reluctantly absorbing more of these costs because they know their customers are doing it tough too,” he said. “Even where prices are increasing, many businesses are only recovering a fraction of the added cost.”
The survey indicates some businesses are delaying investment, carrying more risk, and operating with tighter margins. Kay said the findings should be considered by policymakers as tax and structural reform discussions continue following the recent Federal Budget.
“Government policy settings should be helping relieve the pressure businesses are experiencing, not adding to it.”
- Further reading: South Australian business confidence falls after interest rate hold.
