Business Confidence Slumps As JobKeeper Winds Down
Business confidence in the Hunter and NSW has fallen in the first quarter of 2021, according to the latest Business Conditions Survey from the state’s peak business organisation, Business NSW.
The survey, conducted throughout March as the end of JobKeeper approached, showed that more businesses across NSW viewed the economy as getting weaker (39 per cent) than viewed it as getting stronger (29 per cent).
In the Newcastle and Lake Macquarie statistical region, 37 per cent perceived a worsening of the economy, compared with 27 per cent who believed it was stronger, while in the remainder of the Hunter, 34 per cent thought the economy was trending down, compared with 27 per cent who saw it as improving.
“This data gives some cause for concern, but is not totally unexpected,” Business Hunter CEO Bob Hawes said.
“Rising costs, the imminent end of JobKeeper and the short-term tightening of restrictions across NSW and other states in late December 2020 are all factors that contributed to the drop in business confidence over the first three months of the year.
“Increased operating costs are a significant drag on business and respondents reported that these were rising across nearly all measures, including wages and staff costs, professional services, finance, marketing and advertising, as well as government taxes, levies and fees.
“An increasing number of businesses across NSW are looking to scale back capacity, with 40 per cent of businesses prioritising downsizing in the March 2021 quarter compared to 30 per cent in the previous quarter.
“For many businesses, 2021 will be about regrouping and re-establishing their customer base and staff capabilities.”
Mr Hawes aid there were some positive indicators from the survey. Business hiring and investment in the region remained relatively stable over the survey period, with a modest lift in the number of businesses across the Hunter indicating that they had increased staff numbers in the first quarter of the year.
The survey reinforced the issue of skills shortages in the Hunter, with 50 per cent of businesses in Newcastle and Lake Macquarie and 40 per cent in the rest of the Hunter Valley indicating that they were having difficulty finding employees with required skills.
The survey sought specific information about the effects of the pandemic and the end of the JobKeeper wage subsidy program, which finished on 28 March. While businesses were generally more optimistic about the ongoing impacts of COVID than they had been three months earlier, 44 per cent of those who were receiving JobKeeper expected to have to reduce their workforce when the subsidy ended and half anticipated having to cut working hours for staff.
About Business Hunter
Formerly the Hunter Business Chamber, Business Hunter is the peak policy and advocacy body in the Hunter – the voice of business in the region since 1886.