SA consumers and business confidence softens amidst caution around spending and employment
21 November 2023
Confidence among South Australian consumers and businesses has decreased, driven by increased caution about spending and employment.
The BankSA State Monitor October survey showed that consumer confidence has decreased 2.9 points since July to 104.9 points, the fourth consecutive decline. Business confidence also decreased by 3.0 points to 112.6 points.
However, both measures continue to sit above the 100-point benchmark indicating that consumers and businesses remain more optimistic than pessimistic overall.
BankSA State General Manager Business, David Firth, said that South Australians were less confident about their spending capacity, household financial situation and ability to switch jobs.
“The survey shows that key external factors such as petrol prices, cost of energy, wages relative to the cost of living, and world affairs were concerning both consumers and businesses,” Mr Firth said.
“Inflation pressures and the higher cost of living is starting to materially impact major purchasing decisions. We saw a 22 per cent decrease in people who had made a major purchase in the past three months, and a nine per cent decrease in businesses intending to make a major investment in the coming 12 months.”
Consumers said their top three financial activities over the past 12 months were cutting back on household spending, putting spare cash into savings rather than spending it, and putting off a planned purchase to keep cash in the bank.
Businesses not planning to make a major investment or purchase in the next 12 months also indicated that they were focusing on building up cash reserves and paying down debt amidst uncertainty in the market and increased costs to their business.
“This survey also saw decreased confidence in employment measures as labour market constraints start to show signs of easing,” said Mr Firth. “Consumers are 8 per cent less confident of finding a better job if needed compared with the July survey. There was also a 22 per cent decrease in businesses that had created additional employment in the past three months, and a 15 per cent decrease in businesses’ intention to take on additional employees in the coming months.”
However, businesses and consumers are feeling more optimistic in their perceptions of business activity (up 7 per cent and 4 per cent respectively). Businesses were also more positive about their turnover in the past three months (up 9 per cent) and felt more optimistic about their own situation and the outlook for their business in the next 12 months (up 3 per cent).
Other key findings include:
- All age groups other than 50-64 recorded a decline in consumer confidence. The 35-49 age group are now the most pessimistic and have fallen below the 100-point neutral benchmark. Consumers aged 18-24 remain the most confident.
- Transport, Finance, Construction and Manufacturing are the most confident industries.
- Confidence in the agriculture sector decreased by 36.7 points and is now well below the 100-point benchmark. The recreational sector also decreased.
- Larger businesses with more than $1m turnover continue to be the most confident.
- Confidence among small businesses with turnover of less than $0.5m decreased by 5.4 points.
Consumer confidence in South Australia’s rural regions decreased by 13.5 points in October to 93.4 points, falling below the 100-point benchmark. Regional business confidence decreased slightly by 0.4 points to 102.7 points this survey.
“The survey showed contrasting results for consumer and business confidence across the state’s three key regions,” Mr Firth said.
“The Mid North and Riverland region recorded a 14.3 point decline in business confidence but only a marginal 0.3 point decline in consumer confidence. Conversely, The Southern and the West/North regions recorded solid increases in business confidence of 8.5 points and 1.7 points respectively, but significant declines in consumer confidence of 23.3 points and 22.0 points respectively.”
This survey was conducted between 3-9 October 2023. The State Monitor is unique as the only survey that measures just South Australian consumer and business confidence. The independent survey is based on a statewide phone survey of 300 consumers and 300 small business owners and managers, representative of the population and business community, conducted by the Action Market Research. It is the 82nd monitor in a series that has tracked consumer and business confidence in South Australia since 1997. A baseline of 100 points is used to which the overall survey results are either added or deducted. A result greater than 100 represents a positive result and therefore more optimistic respondents than pessimistic, while a result less than 100 represents a negative result meaning there are more pessimistic respondents than optimistic. The maximum margin of error when generalising the results from the sample surveyed to the population is +/-6% at a 95% confidence level.