The bounce back continues one year on from the start of the COVID pandemic.
Despite the ongoing constraints caused by labour and material shortages, reports of above average top line sales and overall profitability for most businesses provide a tangible projection that this financial year will conclude as one of the best in years.
The Business SA – William Buck Survey of Business Expectations for the March Quarter released today shows business conditions at their highest level since the global financial crisis, and business confidence is sitting at 114 points, 23 points above the ten-year average, creating a powerful combination for businesses.
This better than expected profitability scenario is also leading to increased business investment. Business owners are making hay while the sun shines by investing back into their business during a time of strength. This results in further job creation and investment in technology, plant and premises which further benefits the local economy.
Recruiting employees remains a significant challenge for many businesses. There’s a common belief that this is both an unintended result of Federal Government stimulus reducing the will for some unskilled workers to participate in the workforce until the end of March, and the inability to source international workers, particularly in regional SA. The availability of skilled workers is also a problem for 56% of businesses.
The end of JobKeeper and the JobSeeker supplement in March did not result in the dip many predicted, and with the continued rollout of the COVID-19 vaccine across Australia, we remain hopeful that there will be less uncertainty around domestic border closures resulting in ongoing strong business confidence.
According to the Survey, 37% of businesses are having difficulty sourcing materials with over 79% of those reporting increased difficulty in importing from international suppliers.
Business owners have taken the pandemic as an opportunity to review their processes and lifecycle. This has led to an overall increase in businesses defining a succession plan, with 63% having either already developed or in the process of developing one – up 10% from three years ago. Ten per cent of businesses say COVID has brought forward their exit plans, and 22% say it has delayed their succession.
Overall, the upward trajectory of confidence and conditions are resulting in 35% of businesses having a more positive outlook on their organisation than pre-COVID, and 56% of businesses expecting the state economy to perform even better in the next year.
Although businesses remain cautious due to the risk of outbreaks or snap lockdowns, and despite shortages of supply and workers, they are displaying encouragement by pushing through, investing in their business during a time of strength and contributing to the ongoing growth of the South Australian economy.
By JAMIE MCKEOUGH, MANAGING DIRECTOR
