The region’s peak business organisation, Business Illawarra, has today highlighted new figures that reveal business confidence in the region has plummeted to below the state average, with economic uncertainty and increased costs imposing more pressure on balance sheets. 

The latest Business Conditions Survey, undertaken by Business NSW in collaboration with Business Illawarra, has uncovered quarter-on-quarter pessimism in the region’s business community.  

According to the survey’s index, business confidence in the Illawarra has slipped to -78, down from -56 in February, with local businesses reporting the drop in consumer spending as their highest order concern.    

Consistent with the region’s low unemployment rate – which at 2.6 percent sits lower than both greater Sydney (3.3 percent) and the state (3.0 percent) – businesses in the Illawarra reported being more inclined to hire than the state average, with 20 percent still planning to hire additional staff in the next 3 months. One in five Illawarra businesses (or 21 percent) are planning to cut staff in the next three months, which is a lower proportion than the state average.  

Business Illawarra Executive Director Adam Zarth said that they May figures showed how local businesses are feeling the pinch as economic conditions continue to tighten. 

“In the space of one week we had one of the largest increases to the minimum wage in history, followed by the twelfth interest rate hike since May last year,” he said. 

“Insurance has overtaken energy as the biggest expense concern for businesses – with further workers’ compensation premium increases from July 1 having an impact.” 

“This survey is a proof point for how badly our region’s businesses are hurting because of the combined impacts of rising energy prices, rising interest rates, wage increases for key workers and dwindling consumer spending,” said Mr Zarth. 

Other survey findings from the May 2023 Business Conditions Survey include: 

  • Insurance costs and energy costs are causing the most concern of eight key business expense categories. 
  • Illawarra businesses are among the least inclined to move interstate or offshore if business conditions do not improve (3.4 percent). 
  • Regionally, 23 percent of businesses say they will close if business conditions do not improve. 

The survey also investigated businesses’ attitudes to cybersecurity and Artificial Intelligence (AI), which revealed: 

  • 36 percent of Illawarra businesses are not investing in cybersecurity because they simply can’t afford it, while a further 15 percent are not taking action because it is not relevant to their business. 
  • Illawarra businesses are more likely than NSW average to have engaged expert cybersecurity consultants but are less likely to have upgraded systems, upgraded equipment or acquired additional training.  
  • Only 13.6 percent of Illawarra businesses are ‘receptive’ to adopting AI in their business operations while 35.7 percent were considered ‘not receptive’ 

“With further disruption on the horizon in the form of proposed sweeping industrial relations reforms, NSW businesses are looking to government for decisions that provide optimism for the future,” Mr Zarth said.

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