Business profitability and confidence has taken a hit from rising operating costs and there are signs of a contraction in business investment according to the latest Business Conditions Survey, conducted by the State’s peak business organisation, the NSW Business Chamber.
Survey results point to the first sustained signs of a slowdown in business expansion with respondents reporting a reduced pace of growth in capital spending and staffing. Respondents also noted that business profits had reduced due to the persistence of increasing cost pressures.
“Although business operators remain upbeat about their prospects, and the broader economic outlook, it is essential that the NSW Government continue to deliver reforms that reduce operating costs on business, deliver training that addresses critical skill shortages along with measures that encourage business investment,” said Kellon Beard, business chamber regional manager, Mid North Coast.
“As residential construction moderates, the State’s economic performance will hinge on a substantial public infrastructure pipeline and our strengths in the tourism, education, financial and human services industries,” Mr Beard said.
“Now is not the time for complacency or caretaker measures. The NSW economy is transitioning away from a significant residential construction boom and the government needs to deliver on its next wave of public infrastructure plans.
“Regional projects that can be funded from the NSW Snowy Hydro Legacy Fund need to be progressed as soon as possible to ensure NSW maintains economic momentum. These projects should include measures to drive long term economic development and provide essential infrastructure to help address issues such as drought mitigation and improved transport connectivity.”
The survey notes that business conditions are not uniform across the State. The Hunter Valley, Newcastle and Lake Macquarie have been particularly strong over the past year while conditions are weaker in the far west of the State and the Far North Coast region.
“Business confidence in the Mid North Coast region tracked below the state-wide average, moderating from the previous quarter,” Mr Beard said.
“Business in the region reported increasing capital spending levels with 44 per cent of respondents indicating increased capital spending compared with 20 per cent reporting a decrease. Mid North Coast businesses also reported higher operating costs which have appeared to impact profitability and staffing levels.
“To keep NSW the number one performing state in Australia we need a concerted effort to reduce operating costs for business, deliver critical skills training (particularly for young job seekers) and fast track the delivery of infrastructure that will provide long term economic and community benefit,” Mr Beard said.
The full survey results can be viewed here