A survey of South Australian businesses following the March quarter has revealed a decline in business conditions, despite a busy ‘Mad March’ festival season.
Despite the economic activity, the findings in the South Australian Business Chamber and William Buck quarterly Survey of Business Expectations indicate a continued struggle among local businesses.
The survey results released today, tracking business sentiment for over 44 years, show a 4 percentage point decline in business conditions to 86.7 during the March quarter, a metric that serves as a key indicator of businesses’ trading performance during the period.
This downturn contrasts with the same period last year, where businesses experienced a 5.7 percentage point increase in business conditions. In 2023, the growth was fueled by a bustling festival season and the successful launch of the inaugural AFL Gather Round event.
It’s worth noting that although the AFL Gather Round did not fall within the survey period, more than 50% of responses came after the Gather Round weekend.
Andrew Kay, Chief Executive Officer of the South Australian Business Chamber, believes the enthusiasm for the return of major events in 2023 has been dampened by ongoing economic pressure and the cost of doing business crisis in 2024.
“The main concern on the minds of business owners this quarter is the ongoing cost of doing business, with profitability, government policies, and staff and skills shortages trailing not too far behind.
“Although they have appreciated the boost of another successful festival season, it hasn’t changed the fact that many businesses are in struggling to survive, reporting that costs are at an all time high.
“Revenue metrics show economic indicators such as average selling price, orders received and export sales are all down, while cost metrics such as wages, materials and overheads are still on the incline, as inflation remains sticky.
“These results reinforce why we have advocated for the government to consider payroll tax reform and provide support to help drive productivity and encourage business growth in the upcoming State Budget”, he said.
Business confidence grew moderately for the third consecutive quarter in March by 3.6 points to 91.1, a metric providing insight into the economic outlook of businesses.
“Although this does appear positive, 91.1 is still well below the neutral score of 100,” said Mr Kay.
“38.7% of the businesses we surveyed feel the state’s economy will perform weaker or slightly weaker in the upcoming three months. South Australian business confidence has not been above the neutral score since September 2021,” he added.
As the end of the financial year approaches, businesses are becoming concerned about further wage increases in July at the annual wage review, fuelling the cost of doing business crisis. One business owner responded to the survey by saying, “It often doesn’t look worthwhile staying in business given all the costs and expenses”.
They continued by saying “With what’s left to pay myself, I could step into a full-time position and receive increased wages.”
For a detailed breakdown of March quarter results click here.
