Media Release

Business confidence in South Australia has moderated in October off the back of uncertainty over the ongoing impact of COVID-19 but remains high, according to the latest BankSA State Monitor survey.

The independent survey conducted between 5-12 October found business confidence had decreased by 12.8 points to 121.8 points, the lowest result in the past year but still one of the highest levels of confidence in more than a decade.

Consumer confidence remained relatively unchanged, decreasing by 1.1 points to 120.7 points, but still recording the third highest result since May 2011.

BankSA State General Manager Business Banking, Mr David Firth, said it was unsurprising business confidence had come off an historic high in the July survey, but that underlying business fundamentals such as hiring intentions were still sound.

“We saw an encouraging increase in businesses planning to create additional employment in the next three months, particularly in manufacturing and community services, which is a good sign,” said Mr Firth.

“The largest decreases in confidence occurred in industries such as retail, construction and recreational, which have been particularly impacted by recent border closures and associated restrictions, along with shortages in labour supply.

“The record high level of confidence recorded in the previous July survey was prior the full impact of lockdowns in NSW and Victoria being felt.

“It is understandable that businesses are now more cautious as they wait to see how the roadmap out of COVID restrictions progresses.

“While the October result is lower than the previous three surveys, the average level of confidence across 2021 is the highest yearly result ever recorded.”

The biggest declines in confidence were in business owners’ attitudes towards their own current business situation (down 21 per cent), experiencing or being worried about a downturn in turnover in the past three months (19 per cent) and a reduced perception that small business activity is picking up (down 18 per cent).

Businesses cited China’s influence on Australia’s economy, world affairs and petrol prices as the main external factors contributing to a more pessimistic outlook. However, South Australia’s response to the pandemic, the long-term outlook for the state, and their own household financial position were key drivers of optimism.

Mr Firth said consumer confidence remained relatively steady, with increases across a number of measures including employment and intention to spend.

“There was a seven per cent reduction in people worried about or affected by unemployment in the past three months, greater confidence about job mobility (up 4 per cent), in addition to an increased likelihood to make a major purchase in the coming months (up 5 per cent),” said Mr Firth.

“A greater intention to spend is particularly good news for South Australian businesses as we head into the important Christmas retail and summer holiday period.

“Consumers are feeling positive about South Australia’s response to the pandemic and the state’s long-term outlook.”

However, consumers’ longer-term outlook for spending activity over the next 12 months was lower (down 10 per cent) along with a reduced perception of business activity (down 6 per cent).

The main stated factors impacting consumer confidence included uncertainty regarding COVID-19 and the race to vaccinate, nervousness around border re-openings, and the recent cancellation of major events such as the Royal Adelaide Show and Tour Down Under.

Regional confidence

Business confidence in South Australia’s rural regions mirrored the statewide results with a 14.9- point decrease in October to 117.0 points. However, regional consumer confidence increased by 2.2 points to 121.9 points.

“The west and north region, which includes the Upper Spencer Gulf, Far North and Eyre Peninsula recorded a significant increase in consumer confidence,” Mr Firth said.

“The agricultural sector showed an increase in confidence with the potential for bumper harvests driving positivity, although this has been offset by labour shortages with some businesses unable to harvest to their full potential.

“The significant drop in regional business confidence was mostly felt in the southern region made up of the South Coast, South East, Hills and Murray Plains.

“All regions still have high levels of confidence despite some reductions and are well into positive territory compared with the benchmark rating of 100.”