30 years of business data: Weak business confidence trend the longest in Pulse Survey history

By Emma Clarke

Persistent trends in weak business confidence and poor business conditions are at the longest sustained period in the history of Queensland’s leading report on business and economic sentiment.

Business Chamber Queensland’s Pulse Survey of business conditions for the March 2024 quarter marks three decades of the survey’s history in Queensland and shows confidence and conditions were only worse during the Global Financial Crisis in 2008 and the depths of the COVID economic crisis.

Current weak trends across sentiment, conditions and expectation indicators have been relentless since mid 2022 and are the longest sustained trend in three decades of Pulse data.

Sales and revenue, employment levels, capital expenditure and business profitability further declined in the March quarter while operating and labour costs both increased to near historically high levels.

Business Chamber Queensland CEO Heidi Cooper says poor business confidence is reflective of the compounding impact of high operational and labour costs and a tightening economy with lower sales, the October election, external global factors and challenging workforce conditions also major contributors

“Tightening household and business budgets are leading to a decline in sales and revenue, at the same time when operating and labour costs are reaching record highs,” Ms Cooper said.

“Cost of living pressures and high borrowing costs for both businesses and consumers have dramatically reduced sales revenue, with one in two businesses telling us their sales revenue declined in the March quarter.

“We know there are cost of living pressures in the community and those same cost pressures are being felt by businesses and this data proves those impacts.

“Combined, these business and economic conditions are eroding profitability and productivity, reducing business viability and weakening forward economic confidence.”

Workforce challenges have been the most significant constraint on business growth for more than two years while businesses reported direct wage costs, insurance premiums and customer demand were also significant constraints.

“Businesses are reporting relentlessly challenging operating conditions, combined with a restrictive employment and regulatory landscape, are impacting their ability to manage day-to-day and invest in the future with confidence,” Ms Cooper said.

“Businesses need an economic platform that gets these fundamentals right and gives them the setting they need to trade and employ with confidence.

“We’re looking to the October State Election to ensure the needs of Queensland businesses are front and centre of mind of all candidates and all political parties, in the lead-up to the election and with the next Queensland Government.

“This is a critical year for Queensland businesses and they need effective economic policy to ensure they can meet day-to-day challenges and plan for their future growth and productivity.”

Businesses can contribute their views in Business Chamber Queensland’s Queensland Election 2024 Business Priority Survey.

Key indicators

• Workforce challenges have been the most significant constraint on business growth for more than two years while climatic impacts reduced in the March quarter.
• Business confidence in the future of the state and national economies declined in the March quarter, reflective of compounding micro and macroeconomic challenges.
• General business conditions have been trending downwards since mid-2022 and declined again in the March quarter, but at a slower rate than in the December quarter.
• Half of businesses surveyed said their sales revenue declined in the March quarter.
• Four in five businesses recorded an increase in operating costs, trending towards the record high in mid 2023.
• 65% of businesses surveyed said their labour costs increased, and direct wage costs are the second highest constraint on business growth. Labour costs are expected to moderate in the June quarter while employment levels were unchanged at weak levels.
• Two in three businesses reported their profitability fell during the March quarter, with lower profitability only seen during the height of the COVID economic crisis in 2020. Average selling prices continued to moderate with businesses expecting to increase prices in the June quarter.
• Prevailing weak profit levels, lower sales revenue, high borrowing costs and economic uncertainty continue to impact business investment with capital expenditure falling in the March quarter to levels below the 10-year average.

Business Story

Queensland Hosiery Mill owner Jim Smith said a series of micro and macro economic challenges were putting pressure on the business, including increasing costs, changes in consumer markets and access to capital.

The second-generation family owned manufacturing business has been supplying school socks domestically from the Gold Coast for 56 years. It was started in Jim’s grandfather’s garage and grew to be a significant employer and economic contributor.

Jim said he’d seen cost increases across the business, including imported raw materials, freight, pay roll tax, electricity and land taxes and charges.

“I’ve never seen the business environment how it is now. Costs are rising faster than we can increase our prices,” he said.

“Over the last decade we have seen a lot less competition in what we do.”

Queensland Hosiery Mill has been a Business Chamber Queensland member for 32 years.