Business Chamber Queensland Pulse data: Queensland business confidence outstrips federal despite poor operating conditions and low profitability  

By Emma Clarke

New business sentiment data shows Queensland businesses recorded the third consecutive increase in forward economic confidence, despite persistently challenging operating conditions and historically weak profitability.  

Business Chamber Queensland’s Pulse Report for the December 2024 quarter shows the real-time impact of state and federal elections on business confidence, with businesses reporting continued confidence in the Queensland economy following the October 2024 State Election outcome, while many businesses are still waiting to see the outcome of this year’s Federal Election.  

Businesses cited both elections as opportunities for positive business and economic policy reform and a reason for increased economic confidence over the next 12 months. 

Confidence was also fuelled by an expectation for further interest rate softening.  

Queensland economic confidence reached its highest level in two years, while businesses were increasingly more confident in the state’s economic future than that of the national economy, creating the most significant gap between confidence in the State and Federal economy in four years.  

The data shows despite this, actual operating conditions in the December quarter were unexpectedly weak and failed to match confidence. 

Business Chamber Queensland CEO Heidi Cooper said it was reflective of a persistently challenging business operating environment in Queensland which was further challenged during the recent disaster season. 

“The data shows while forward economic confidence was strengthening, actual business conditions including sales and revenue, profitability and the ability to run a business didn’t match confidence,” Ms Cooper said. 

“In fact in the December quarter we saw consistently weak profitability which returned to its lowest levels since the peak of the COVID economic crisis, while three in four businesses reported yet another increase in their operating costs.  

“Of course these challenging conditions were further compounded by the recent disaster season which impacted businesses in both Far North Queensland the South East. 

“Unfortunately, natural disasters are now a regular part of Queensland business life and compound on already challenging business operating conditions which is what we’re seeing in this most recent data. 

“Businesses need to be supported to build resilience in their business during normal operating times, so they can respond to challenges and major economic disruptions.” 

Ms Cooper said alongside local and national economic impacts, businesses increasingly expected foreign influence would impact their business this year. 

“International politics, tariff wars and the Australian dollar depreciation had material and serious influence on business performance and expectations,” Ms Cooper said. 

“While businesses are fully aware of the local and Queensland factors, they are now also expecting policies from Canberra and overseas to impact their business performance in the future.  

“Our latest results are reflective of the highly challenging business operating environment in Queensland, and the compounding impact of much larger macro economic challenges  beyond businesses’ control on a day-to-day level. 

“Businesses tell us the current conditions are crippling. 

“Going into the Federal Election, businesses are looking for strong economic policies and foreign relations as well as tangible improvements to their day-to-day operating environment. 

“It is essential governments at all levels recognise the economic impact of any business disruption on an already stretched and stressed business community and effectively support businesses to build their resilience long term. 

“Current business conditions must be reformed and businesses must be supported to realise the hope they have in the future of the economy locally and nationally.” 

Business Chamber Queensland’s Pulse Survey of business conditions has been measuring Queensland business confidence and expectations for more than 30 years.  

It’s the state’s most established, comprehensive and trusted source of business sentiment, and measures employment levels, turnover, business profitability and business confidence. 

Business story 

Clothing and homewares retail boutique Soho Bay owner and director Vicki Hansen said persistently weak economic conditions and high inflation had meaningful impacts on retail stores, including her four clothing boutiques across South East Queensland.  

“There are challenges that come with just day to day functions of running a business, on top of the poor economy and interest rates are so high. Customers say they just can’t shop anymore because they don’t have the cash for non-essential items. Because of this we’ve seen businesses close and disappear into the abyss,” Vicki said.   

“We have experienced increases in rent, wages, electricity and other business expenses.  It is difficult to pass on these increases to our customers and remain competitive.  Reduced revenue and increased costs are crippling.” 

Vicki said governments needed to prioritise business support, especially in the areas of rent, wages and tax relief including payroll tax, for small business to survive through these challenging times. 

She said a policy to allow businesses to consolidate their bills would also support cash flow and long-term viability. 

“These are the things that are killing businesses, it’s choking us,” she said. 

“In the current environment, it’s one step forward and three steps back. There’s always a tax or a fee due and it’s difficult to continue paying out when you don’t have the income coming in.” 

Vicki’s employs 10 people across four stores at Cannon Hill, Caloundra, Coolangatta and Redcliffe. 

She says sales and revenue has been deteriorating for the past 18 months while community issues like crime are compounding on an already tough economic and business environment. Some of her stores were also in the firing line of the recent natural disaster in South East Queensland. 

Despite the business challenges beyond her control, Vicki said she had hope for the future of her business. 

“My staff keep me going,” she said. 

“We’d like to trade through these current challenges and come out the other side with our head still above water. 

“We have hope and believe the economy will eventually turn with good governance. We believe in what we do and hope to continue trading well into the future. 

“Small businesses are considered the backbone of the country and right now the backbone is crumbling.”  

Key data 

• General business conditions declined for the second consecutive quarter but are expected to improve.  

• Sales revenue declined unexpectedly and is now below the 10-year average but above this time last year.  High cost of living including mortgage repayments and higher borrowing costs for business projects and investment have continued to weigh down business to consumer and business to business sales.   

• Operating costs during the December quarter were elevated. Three in four businesses recorded an increase in their operating costs.  

• 61% of businesses indicated their labour costs increased but the index softened from the previous quarter and returned to levels similar to 2023.  

• Profitability unexpectedly declined in the December quarter reflecting a deterioration in sales and revenue whilst being further weighed down by high operational and labour costs.  

• Average selling prices were almost unchanged from the previous quarter and are at a moderate level. Prices are not expected to change in the March quarter.   

• Employment levels continued the trend set in early 2024 of moderate decline.   

• Prevailing weak profit levels, low sales revenue, higher borrowing costs and uncertainty continue to impact negatively on business capital expenditure. The index declined slightly and is below this time last year and the 10 year average.  

• Insurance increased to the highest constraint on business growth, up from the fourth highest constraint last quarter.   

• The level of federal business taxes and government charges is the second largest constraint up from third in the September quarter.