SA business confidence at lowest point on record, as corporate leaders demand focus on exports
South Australian business confidence is in freefall and has plunged to the lowest point on record – and corporate leaders say Premier Steven Marshall must respond decisively.
SA Business
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- BankSA State Monitor: Consumer confidence at record low
- Business SA: We can turn SA’s gloom into boom
- William Buck: Time to shut out ‘external noise’ on SA
Business confidence in South Australia hit a record low in the three months to the end of September, declining for the third quarter in a row, according to a new survey released today.
The fall in confidence to 71.6 points is the lowest level on record in the Business SA/William Buck Survey of Business Expectations.
Business conditions are also in the negative territory at 78.7 points, falling nine points since June, and close to 25 points since this time last year, the survey found.
Business SA chief executive Martin Haese blamed a ”confluence of issues” including high unemployment, interest rate cuts, land tax uncertainty, geopolitical tensions and ongoing high utility costs.
“We don’t want to talk the economy down, and we certainly don’t want this to become a self- fulfilling prophecy. But the numbers cannot be misinterpreted,” Mr Haese said.
He called on the state government to “double down on exports growth”, which had shown some improvement recently, but had declined 18 per cent over the last 12 months.
“Export education and implementing more support programs for small and medium businesses is needed,” he said.
Population growth for SA was also key, through more attraction strategies in the form of visas, but also discussions with the Federal government around migrant distribution away from Sydney and Melbourne.
“We are a shrinking market with rising costs, we want to be a growing market where higher costs are absorbed through increased demand,” he said.
He also pushed for a quick resolution on the land tax plan.
The state business lobby group has been conducting the survey since 1980, and the latest results are based on responses from 230 local businesses in partnership with accounting firm William Buck.
Last month’s BankSA St ate Monitor survey showed consumer confidence was at a record low while businesses had the biggest decline since May 2014, but remained in positive territory.
Overheads were continuing to rise at a time when confidence was low.
“There’s pessimism on the horizon and businesses aren’t expecting conditions to improve, despite leading into the busiest time of the year for many.
“The figures are deflating because we were optimistic the economy was improving, and we know there are many businesses succeeding locally and overseas.”
He called for a stronger economy moving in a positive direction so the state could generate jobs and businesses could have the confidence to expand or export.
“Businesses have told us conditions have tightened even further.
“Total sales, orders received and average selling price are all down causing a decrease in profitability for more than half of respondents with only 15 per cent reporting an increase,” he said.
Mr Haese said Business SA would be doing its best to “get back on the optimistic train” and urged people to open up their wallets to support the state’s small businesses in the lead up to Christmas.
“We’re hoping that by December, we can turn our deflation into elation.”
William Buck managing director Jamie McKeough said confidence had fallen to what could be considered a dramatic low, but they had come from a similarly dramatic high a year ago.
“The survey results reflect the volatile times in which we live, however, if you sit back and reflect – business conditions could be worse,” Mr McKeough said.
“Businesses need to ignore the external noise and focus on what they can control.”
Shadow Treasurer Stephen Mullighan said the confidence crash is a “damning indictment” on Steven Marshall and his government.
“This collapse in business confidence is bad news for jobs at a time when unemployment is already high,” Mr Mullighan said.
“Business is calling for leadership, but Steven Marshall is asleep at the wheel.”
Premier Steven Marshall’s office has been contacted for comment.
Mussel-ing in to get over rough time
Tough business conditions haven’t stopped Eyre Peninsula Seafoods from navigating the choppy waters of high costs to bring a new “game-changing” product to market in Asia.
EP Seafoods’ first container full of its Port Lincoln mussels arrived in Singapore last week with a month-long shelf life – instead of the standard 10 days.
The new product is expected to boost exports significantly while providing a healthy uptick to national sales, EP Seafoods co-owner Mark Andrews told The Advertiser.
“Conditions are tough and we are finding it quite difficult with the wage increases,” Mr Andrews said.
“Every year we have a 3 per cent increase in our wage bill. It’s a big concern because we are not able to look after the long-term employees who do more for the business.”
“Then there is the ever-increasing cost of freight due to high fuel prices.
“But, I am taking these challenges and doing what I can to face them.
“We just have to build more efficiency in what we do while we are value-adding to suit demand and educating consumers about the benefits of getting mussels on their plate.”
Started in 2016, EP Seafoods is made up of three premium mussel brands – Kinkawooka Shellfish, Boston Bay Mussels and Spencer Gulf Mussels.
The business, which exports 25 per cent of its mussels overseas, now employs about 40 staff, including casuals.
In September, the business announced a more aggressive push into Southeast Asia and China.
Supported by a state grant, a new multimillion-dollar production facility in Port Lincoln is taking shape, allowing the company to increase production of blue mussels from 2000 tonnes per annum to 3500 tonnes.
Thomas Cappo Seafoods is helping EP Seafoods with its exports push.
“For me, business confidence is about me putting in my 50-60 hours a week, despite the conditions and what I am faced with, to see it grow.”
More than 64 per cent of the 230 businesses surveyed expected the South Australian economy to perform slightly weaker or weaker over the next 12 months.
Predictions about the national economy were split more evenly with 51 per cent expecting it to be weaker or slightly weaker over the same period.