Media Release

Confidence among South Australian consumers and businesses has decreased in the past four months, largely driven by caution about the climate for spending over the coming year.

The latest BankSA State Monitor survey shows business confidence has decreased by 8.7 points to 110.5 points and consumer confidence has decreased 1.2 points to 111.2 since October 2022.

However, BankSA State General Manager Business, David Firth, said that despite decreasing for the second consecutive survey, confidence was still holding at reasonable levels.

“While we have seen a decrease in confidence at the start of this year, overall confidence is comfortably above the 100-point benchmark, which means the general mood of South Australians remains more optimistic than not,” Mr Firth said.

“The softening in consumer confidence was driven by caution about the outlook for spending over the next 12 months. As a result, consumers are focussing on keeping their finances on a stable footing, finding savings, and reviewing household budgets in 2023.  

“While there is increased concern about their financial position over the longer outlook (down 7 per cent), South Australians are more positive about their current situation (up 3 per cent).

“This was reflected in a 5 per cent increase in those still planning to make a major purchase in the next three months.

“However, we are seeing more caution about job security, with an increase in households affected by, or concerned about, finding suitable employment despite historically low unemployment rates.”

Consumers were also concerned about the outlook for small business in South Australia.

This concern was shared by businesses with overall confidence falling below consumer confidence for the first time since July 2020, and decreases across all measures.

Businesses’ sentiment about their current situation decreased (14 per cent), with confidence of an improvement in the next 12 months also falling (down 11 per cent).

“As a result, we are seeing businesses focussed on operating their business effectively rather than growth and expenditure, with less appetite to invest in a major purchase in the next 12 months (down 25 per cent),” Mr Firth said.

Businesses also indicated they are less likely to hire additional employees over the next three months.

“However, certain sectors are faring better, with a 33-point rebound in business confidence in the transport sector. This is likely due to supply chain capacity constraints starting to ease and more stable fuel prices. Agriculture has also seen an increase in confidence on the back of a record grain harvest.

“Labour pressures also continue to ease from previous highs, down a further 2 per cent. Access to migrant workers was a key reason, with only 9 per cent of businesses citing this as an issue now compared to 43 per cent in October.”

Consumers and businesses are largely aligned on the broader factors that are of concern. These include petrol prices, world affairs, wages relative to the cost of living, the state of the world economy, interest rates and other countries’ influence on Australia’s economy.

Consumers and businesses revealed their top five financial goals for 2023 as:

Consumers:

• Keeping finances on a stable footing
• Increasing savings
• Cutting back on spending
• Improving/changing household budget
• Sitting tight

Businesses:

• Improve business efficiency
• Lift business turnover
• Improve customer service
• Increase customer numbers
• Increase customer spend

Regional confidence

Consumer confidence in South Australia’s regions increased by 2.8 points in February to 110.7 points. Regional business confidence decreased by 4.4 points to 105.8 points this survey.

“Consumer confidence by region saw strong improvements on the Yorke Peninsula and the Hills and Murray Plains. Riverland consumer confidence declined by 20 points, perhaps due to the impacts of flooding, while Eyre Peninsula also recorded a large decline,” Mr Firth said.

“The decrease in business confidence was driven by concerns about their business’ performance ahead, their current business situation, and less likelihood to make a significant purchase.”