NSW Business Outlook Update

The July Business NSW quarterly Business Conditions Survey has been released, highlighting the challenging conditions businesses currently face.

1,118 businesses, from sole traders and SMEs to large corporates, took part in the survey that highlighted while unemployment sits at a 48-year low and the economy continues to grow, businesses are struggling with an increase of staff being absent from work due to COVID-19 or the flu and are concerned about business conditions in the near term, including higher wages, licence fees, energy prices or simply staff not available to work.

“It’s very hard to run a business in a pandemic. The constant phone calls of staff calling in sick and the general depression and apathy post bushfires, virus and flood is hard to manage. We’ve had a team of people for over 25 years and I’ve observed more emotional stress in our team than ever before.”  - Accommodation and food services.

The business confidence in NSW has weakened significantly this quarter, reducing to levels on par with those recorded during previous COVID-19 outbreaks or lockdowns, falling from the last quarter’s result of -30.6 to -68.6 for July. Capital spending and hiring are both expected to slow as businesses grow cautious in the prevailing conditions.

About one in five businesses have contingency arrangements in place to minimise disruptions due to staff absence, though having a contingency plan may not be sufficient to shield businesses from operational disruptions. Of the respondents with contingency arrangements in place, 28 per cent still expect to have to make ad hoc decisions according to the situation, 17 per cent still expect to have to reduce business activities or operating hours and 14 per cent still believe they cannot avoid major disruptions to their business.

Skills shortages were also highlighted in the survey, with one employer in the professional, scientific, and technical services field stating: 

“As an employer, I would like to see far more government emphasis on training young Australians than importing skills from countries who need those skills more than we do.”

Another employer in the retail sector stated: “Finding staff is a major problem... I want to expand my business, but there is [a] total shortage of staff. Where my shop is located, [every day] the shop owners are asking each other if they know someone looking for more hours.” 

Looking forward, most regions expect a modest rebound in the next quarter, however, five regions expect the index to drop further.