Business confidence is dropping in the region, with some owners considering closing their doors. Photo: Region.
Confidence among the Illawarra’s business community has plummeted to below the state average, with many saying they will be forced to close if economic conditions don’t improve.
The latest Business Conditions Survey, undertaken by Business NSW in collaboration with Business Illawarra, has revealed quarter-on-quarter pessimism in the region’s business community.
According to the survey, business confidence in the Illawarra has slipped to -78, down from -56 in February, with local businesses reporting the drop in consumer spending as their biggest concern.
Regionally, 23 per cent of businesses say they will close if conditions don’t improve.
Business Illawarra Executive Director Adam Zarth said the May figures showed how local businesses were feeling the pinch as economic conditions continued to tighten.
“In the space of one week we had one of the largest increases to the minimum wage in history, followed by the 12th interest rate hike since May last year,” he said.
“Insurance has overtaken energy as the biggest expense concern for businesses, with further workers’ compensation premium increases from 1 July having an impact.
“This survey is a proof point for how badly our region’s businesses are hurting because of the combined impacts of rising energy prices, rising interest rates, wage increases for key workers and dwindling consumer spending.”
Businesses in the Illawarra reported being more inclined to hire than the state average, with 20 per cent still planning to hire additional staff in the next three months.
However, one in five local businesses (21 per cent) are planning to cut staff in the next three months, which is a lower proportion than the state average.
Insurance and energy costs are causing the most concern of eight key business expense categories.
The survey also investigated businesses’ attitudes to cybersecurity and artificial intelligence (AI), which revealed that 36 per cent of Illawarra businesses are not investing in cybersecurity because they simply can’t afford it, while a further 15 per cent are not taking action because it is not relevant to their business.
Illawarra businesses are more likely than the NSW average to have engaged expert cybersecurity consultants but are less likely to have upgraded systems, upgraded equipment or acquired additional training.
Only 13.6 per cent of Illawarra businesses are “receptive” to adopting AI in their business operations while 35.7 per cent were considered “not receptive”.
“With further disruption on the horizon in the form of proposed sweeping industrial relations reforms, NSW businesses are looking to government for decisions that provide optimism for the future,” Mr Zarth said.
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