SA business and consumer confidence remains above long-term average despite signs of softening
1 November 2022
Confidence among South Australian consumers and businesses remains above the long-term average despite decreasing over the past four months.
The latest BankSA State Monitor survey shows business confidence has decreased by 2.2 points to 119.2 points, and consumer confidence has reduced slightly by 0.5 points to 112.4 since June.
BankSA State General Manager Business, David Firth, said that while consumers and businesses were more concerned about their own financial position this survey, confidence around jobs remains strong.
“South Australians are less worried about unemployment (16 per cent better) and have greater confidence they could change jobs if needed (up 8 per cent),” said Mr Firth.
“The slight overall decrease in consumer confidence saw a reduction in spending, both on significant purchases over the past three months (down 12 per cent) and intention to make any significant purchases in the coming three months (also down 12 per cent).
“However, businesses were more positive about spending, with increased intention to make a significant purchase in the next 12 months (up 3 per cent).
“While there has been a softening of results this survey, and confidence is below the elevated levels seen in 2021, both consumers and businesses remain more confident than the preceding nine-year average, and well above the 100-point ‘neutral’ benchmark.”
Businesses were less confident about their current business situation (down 9 per cent) and more cited a recent downturn in turnover (up 6 per cent).
They also said the rising cost of doing business and supply chain issues were their key challenges. The number of businesses experiencing a shortage of labour over recent months increased (up 4 per cent), and is consistent with the increased confidence of people around employment opportunities.
“Many industries, such as community services, manufacturing and the recreational sector, are tracking well above the long-term trend.
“Other industries, such as the construction and transport sectors, are feeling the impacts of labour shortages, supply chain issues and increased fuel costs.”
Mr Firth said the gains in business and consumer confidence seen earlier this year from eased COVID restrictions have been tempered more recently with concerns about inflation and the general economic outlook.
“Macro economic factors, such as the rising cost of living, tight rental market, slowing property prices and share market performance, are offsetting the gains in consumer positivity around wages growth, improved employment security and the end of COVID restrictions,” Mr Firth said.
Consumers and businesses are also broadly aligned on the external factors contributing to a decline in confidence. These included petrol prices, world affairs, wages relative to the cost of living, interest rates and China’s influence on Australia’s economy.
However, they are also optimistic about South Australia’s long-term outlook, employment and income security, and opportunities available to them.
In other key findings:
- Older consumers (50+) are more pessimistic than younger consumers.
- The most confident consumer segment was 25-34 year olds.
- Blue collar workers recorded a larger increase in confidence than white collar workers.
- The most confident industries were community services, manufacturing and finance.
- Businesses with turnover above $1m had a decline in confidence, but businesses with turnover below $1m recorded an increase in confidence.
In rural South Australia, confidence varied from region to region, however overall:
- Business confidence increased by 6.2 per cent to 110.2 points;
- Consumer confidence declined by 6.5 per cent to 107.9 points.
“The increase in business confidence was more pronounced in the Eyre Peninsula, South Coast, South East, Yorke Peninsula and the Riverland. Decreases were recorded in the Upper Spencer Gulf and Far North, Barossa and Mid North, and Hills and Murray Plains,” Mr Firth said.
“Consumer confidence by region was a mixed bag, with the South Coast, South East, Riverland and Eyre Peninsula recording increased confidence, while the Upper Spencer Gulf and Far North, Yorke Peninsula, Barossa and Mid North, and Hills and Murray Plains decreased in confidence.”