Queensland business confidence weak as interest rate impact shows

Wednesday 17 May, 2023 | By: Emma Clarke

Interest rates are having among the highest impact on business growth for the first time in more than a decade, new data from Business Chamber Queensland shows. 

Out today, Business Chamber Queensland’s Pulse Report of business conditions shows level of demand and economic activity as well as interest rates emerged in the top five constraints on business growth in the March 2023 quarter.  

Retaining and recruiting employees is still the most significant constraint for the business community. 

It comes as six in 10 businesses said their profitability weakened in the March quarter.  

Business Chamber Queensland CEO Heidi Cooper said high interest rates and inflation impacted businesses directly and indirectly. 

“While many businesses have loans to service, so do their customers which means high interest rates are impacting businesses’ bottom line both directly and indirectly through consumer behaviour,” Ms Cooper said. 

“We’re seeing both interest rates and economic activity emerge in the top five constraints on business growth in the March quarter. We haven’t seen interest rates ranked this highly as a constraint on business growth since 2010.  

“Retaining and recruiting employees is still the most significant constraint for the business community, as we continue to see workforce challenges impact businesses right across the state.”  

Business Chamber Queensland’s Pulse Survey has measured Queensland business confidence and expectations for more than 20 years.  

The Pulse Survey is unchallenged as the most authoritative, timely and comprehensive snapshot of Queensland business sentiment, providing critical insights into the opinions of business owners across the state.  

Pulse includes detailed measurements on employment levels, turnover and business profitability.  

For the third consecutive quarter, Pulse March quarter data showed macroeconomic issues were impacting businesses’ confidence in the future of the state and national economies. 

“That’s despite satisfactory business performance,” Ms Cooper said.  

“While general business conditions and sales and revenue are steady, wider challenges including workforce and high business operating costs mean businesses have weak economic confidence in the next 12 months.”  

Across other indicators, eight in 10 businesses reported higher operating costs in the March quarter, with expectations of further increase in the June quarter, while close to 60% of businesses indicated their labour costs also rose in the three months to March. 

“We know the cost of doing business is really putting pressure on businesses’ ability to thrive day-to-day and long term,” Ms Cooper said.  

“These high costs mean six in 10 businesses told us their profitability weakened during the March quarter.”  

“It is an important time for business in Queensland and it is essential that businesses are supported to meet current day headwinds while ensuring the state’s business community has the confidence they need to plan for the future.   

“It is our priority to ensure every business is able to take up the opportunities ahead in Queensland.”  

‘Looking at budgets carefully’  

Kate and Oscar Henderson

Brisbane hair salon, Elysium, owner Oscar Henderson said high interest rates, inflation and the cost of living was impacting customer confidence. 

“Customers are a little bit more cautious in spending money, some clients are really looking at their budgets carefully,” Mr Henderson said.  

Despite the challenges, Mr Henderson said his 15 years of business experience indicated customer confidence and spending would rebound alongside business confidence.  

“There are times when money is going around and there are times when people pull in their purse strings – now is one of those times,” he said.  

“We’re in a pretty good place in Queensland, it’s a good state to be in. Now is just a small down point, I don’t think it will have a long-term impact on business.  

“Ultimately there is enough business out there and it’s still a positive business environment.  

“It’s a good time for businesses owners to be reviewing their businesses and planning for the future.”  

To hear more business insight on the latest Pulse findings, join Business Chamber Queensland’s expert policy and research team at a free event to understand what the latest business sentiment data means for businesses – now and in the future. Details 

Key indicators 

  • 81% of businesses reported higher operating costs during the March quarter and 59% businesses reported higher labour costs. 
  • General business conditions decreased slightly but remain satisfactory, and are expected to hold in the June quarter.  
  • Total sales revenue in the March quarter decreased, indicating a marginal decline in sales. 
  • While business confidence in the future of the state and national economies increased slightly, both remain weak.  
  • 63% of businesses indicated their profitability weakened during the March quarter.​ 
  • Average selling price remained at moderate levels.  
  • Employment levels and capital expenditure were both steady in the March quarter, both satisfactory.  
  • The online Pulse Survey of Business Conditions collected responses from Queensland businesses during the period of April 4 to April 25, 2023 on business sentiment and activity for the March quarter 2023.

Acknowledgement of Country

Business Chamber Queensland respectfully acknowledges the Traditional Owners and custodians of the lands from across Queensland and the Torres Strait. We acknowledge the Jagera and Turrbal people as the Traditional Custodians of Meanjin (Brisbane), the lands where our office is located and the place we meet, work and learn. We pay our respects to Elders past and present.