Pause in interest rate hikes a major factor
Business confidence in New South Wales has reached its highest level in nearly two years, despite ongoing concerns over customer spending power, insurance, and energy costs.
According to the latest NSW Business Conditions Survey, the pause in interest rate hikes has contributed to the improvement of the Business Confidence Index for the third consecutive quarter, now standing at -52.9.
The survey, which gathered responses from over 1,100 businesses, also revealed that a vast majority (95%) of businesses report being affected by the rising cost of living, and over half (51%) of businesses in NSW have encountered supply chain disruptions over the last three months.
There was also an increase in job applicants, attributed to cost-of-living pressures, as reported by 10% of businesses. However, 92% of businesses reported challenges in attracting and retaining skilled workers. In terms of staffing, 17% of businesses plan to recruit more employees in the coming three months, while 18% anticipate reducing their workforce.
The latest Business Conditions Survey – the most comprehensive business temperature check in the most important state – reveals the pause in interest rate rises has helped lift the Business Confidence Index for the third straight quarter to -52.9.
— Business NSW (@business_nsw) March 6, 2024
Report: https://t.co/PZliqKXUN6 pic.twitter.com/yEv2nhrb16
Daniel Hunter (pictured above), chief executive of Business NSW, expressed cautious optimism about the gradual improvement in business sentiment, noting that the rise from a historically low base is significant.
“The increase in business confidence to its highest level in nearly two years has largely been driven by interest rates remaining on hold,” Hunter said. “With every interest rate rise, small to medium businesses experience an almost immediate reduction in customers walking through the door. This increase in business confidence is a positive sign.
“A majority of businesses have observed consumer behavioural changes in the form of reduced frequency of purchases, reduced quantity per order, increased appetite for lower cost substitutes and increased price negotiation.
“Our members remain concerned about the new industrial relations laws which threaten to put a serious dampener on the NSW economy in the coming months and years. It remains vitally important that our state and federal governments make the cost of doing business the number one, two and three issues on their agenda. To improve the ease of doing business, survey respondents consider taxes, levies and government charges as the area that requires top-priority attention from government.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
