The pulse of New South Wales' business community has been captured in the latest Business NSW Business Conditions Report (May 2024), offering a comprehensive insight into the state's economic landscape. With nearly 900 businesses contributing their experiences, the report provides an understanding of prevailing sentiments, challenges, and aspirations across industries and regions.
KEY FINDINGS OF THE REPORT
1. Fluctuating Business Confidence
Despite witnessing three consecutive quarters of growth, the Business Confidence Index has taken a dip in the June quarter, indicating a wavering sentiment among businesses.
2. Cost Concerns
Rising business costs remain a top concerns for NSW businesses, with insurance, taxes, and energy expenses cited as primary worries, reflecting the financial strains faced by businesses.
3. Interest Rate Worries
Interest rate concerns have returned despite no monetary policy changes since November 2023. Businesses are most worried about the impact of interest rates on customer spending and their profit margin.
4. Staffing Intentions
While a majority of businesses (62%) plan to maintain their current headcount, a notable portion (21%) anticipates reducing staff, underscoring the cautious approach towards expansion amid market fluctuations. However, 16% of businesses are optimistic about hiring additional staff, hinting at pockets of growth opportunities.
5. Productivity Challenges
46% of businesses have observed a decline in workers’ productivity. On the other hand, 10% of businesses have observed an increase in workers’ productivity and most of these businesses have invested in staff training.
6. AI Adoption
Compared to staff members, business owners or managers are more receptive to adopting AI in business operations. The key motivation of AI adoption is cost savings, while the biggest concerns are privacy and a lack of in-house expertise.
7. Telecommunication Concerns
The self-rated availability and reliability of access to telecommunications is notably lower for businesses outside of Sydney. This includes access to mobile phone services, broadband internet services, higher bandwidth business-specific services and data security support services.
8. Investment Priorities
Businesses across NSW advocate for future investments, urging a focus on energy reliability and cost as paramount. Transport infrastructure emerges as a priority for Sydney-based businesses, while regional businesses emphasise the significance of housing availability.
CALL FOR GOVERNMENT ACTION
The findings of the report emphasise the need for targeted interventions to support businesses in navigating challenges and fostering growth. Business NSW CEO, Daniel Hunter, stresses the urgency for the NSW Government to prioritise the needs of small and medium enterprises (SMEs) in the upcoming State Budget. With concerns over GST revenue and inflation looming large, Hunter emphasises the need for tax relief and fairer distribution of resources to bolster confidence and stimulate economic recovery.
