June Quarter Overview

Queensland business confidence deteriorates but actual performance improves.

Latest results of the June Quarter Pulse Survey indicates an unusual situation of a significant deterioration of business confidence but solid business performance in the June quarter with similar expectations for the September quarter.

Total sales revenue was the stand out positive for the survey with 42% of Queensland businesses indicating their sales and revenue improved during the June quarter. Business feedback revealed that a combination of recovery spend following the floods, recovery spend from COVID-19 especially in the area of tourism coupled with a spending and investment tap turned back on following the federal election have all boosted sales as well as overall general business conditions during the June quarter.

However this is where the good news ends and the sobering news starts. Business confidence has taken a dramatic turn for the worse as a result of a number of compounding issues.

Cost challenges are many and are collectively leading to the erosion of business viability. These issues include:

> Rising wage and labour costs

> Supply chain disruptions which are causing stock shortages and delays in both goods and services

> Rising inflation and cost of goods and services

> Increasing fuel and energy prices.

Accordingly it is unsurprising that both operating costs and labour cost PBIs are at their highest levels on record and are anticipated to remain there for the foreseeable future.

Revenue challenges also clearly evident and include:

> Lack of staff availability including skill and labour shortages

> Lack of availability of affordable accommodation and rental housing

> Interest rate rises that are starting to erode consumer and business spending

> Global economic downturn potentially impacting on Queensland exports

> Reduced consumer confidence and emerging fear of a recession

> Potential threat of foot and mouth disease on Queensland’s rural industry.

As a result and despite improved sales, the profitability PBI did not budge and is actually expected to contract in the September quarter.

In general the above revenue and cost concerns are leading to an expectation of weaker economic growth over the next 12 months for both Queensland and Nationally which is the metric used to measure business confidence. Whilst many of these issues are macroeconomic in their nature they are cascading down to impact businesses at a micro level.

This Pulse's Hot Topics excerpt - Recruiting and retaining staff

This Pulse’s hot topic questions focuses on Queensland business difficulty with recruiting and retaining staff and significant increases in business related costs.

Excerpt Quotes from businesses

"Business sentiment was strong going into this 4th Quarter, however COVID, interest rates and shortages on staff are taking their toll on business & in particular family run businesses where vacant jobs are covered by directors having to put in long days, with no holiday in sight. It’s taxing our health."

– Brisbane

"I feel the Reserve Bank raising Interest rates due to this alleged Inflation is positively destroying to the general public & public & small business - we have all come through covid, floods, Ukraine repercussions so enough is enough. We are still trying to get on our feet and now this hike in rates is already slowing down everything.The fact the Politicians received ANY form of pay rise is DISGUSTING when our hospital & ambulance staff are crippled by long hours & understaffing. Where this year heads now is anyone’s guess - hope not too many people lose their homes & business."

– Gold Coast

"Business is starting to slow down. Customers are waiting and watching to see where the next 3 to 6 months goes. Customers are spending on necessity items only and holding off on the non-essential items/projects/spending. Competitors are in a similar position so they start to reduce quotes which reduces profitability. Election, change of Govt always slows things down. Interest rate rises. There is a sense of save money, wait and see what happens? Big projects and spending is already in progress, nothing new starting?"

– Far North Queensland

"Macroeconomic influences will continue to impact our productivity and performance in regional economies. In particular the ability for local business and industry to balance their cost and pricing structures. The Federal Election I believe will have some short term positive impacts for our region but they will have their work cut out for them managing our trade and associated impacts on the $A and flow on to managing interest rates and general money flow. Having decent infrastructure projects like the Bundaberg Hospital, Paradise Dam and the continued highway upgrades will certainly keep investment flowing to our region but it will also put significant pressure on already constrained resources and flow on effect to our housing and accommodation pressures. Overall, there is plenty to be optimistic about in a business context if we can manage the challenges."

– Wide Bay

Regional Comparison Overview

View Regional Pulse Surveys by clicking on the region's name:

Brisbane

Far North Queensland

Gold Coast

Sunshine Coast

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