The latest Business Conditions Survey, undertaken by Business NSW in collaboration with Business Illawarra, has found that business confidence in the region is the highest it has been in nearly two years but businesses remain concerned about cash-strapped customers, insurance and wage costs.

This quarterly survey of over 1,100 businesses across NSW has found that more than 50% of businesses have experienced reduced customer demand for their products and services (58%), cash flow disruptions (52%) and increased wage expectations (51%).

Business Illawarra Executive Director Adam Zarth said that the survey puts beyond doubt that whilst business confidence in the Illawarra is the highest it’s been in nearly two years and higher than the state average, many Illawarra businesses are continuing to feel the impacts of a slowing economy, inflation, wage costs, insurance costs and supply chain issues.  

While headline inflation has been moderating, price levels remain high and this is weighing on household spending. In addition, cost of living pressures are resulting in workers putting pressure on their employers for wage increases.

“Increased wage expectations is affecting 61% of respondents in the region, compared to only 51% across NSW. In such an environment, Illawarra businesses will continue to remain cautious about taking on more staff with 59% of respondents saying they intended to maintain the current headcount in the next 3 months, and only 22% intending on hiring new staff.”

“With the Illawarra region’s unemployment rate for January reported as 8.7 percent, more than twice the NSW average for January and twice the average over the past 12 months in the region, it seems that we are potentially seeing staff cuts emerge as a response to the cost increases for business.”

“Supply chain issues also continue to be a concern in the region with 16% of respondents saying that they had been negatively impacted by international supplier issues, double that of the state average of 8%.”

 Mr Zarth said that 45% of respondents said that a lack of affordable housing continues to be a barrier to attracting and retaining skilled workers. This has increased from only 35% of respondents reporting this 12 months ago.

Other key findings of the survey include:  

  • Insurance costs are the number one cost concern for businesses, followed by taxes/levies and wages.
  • More than two thirds of respondents (67 percent) said higher wages demanded by workers was the biggest barrier to attracting and retaining workers.

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