September Quarter Overview

Queensland business confidence deteriorates further but actual performance remains stable.

Latest results of the September Quarter Pulse Survey indicate a continuation, and worsening, of the unusual situation observed in the previous quarter - a significant deterioration of business confidence but solid business performance with similar expectations for the December quarter.

Total sales revenue remained the key positive indicating their sales and revenue improved during the September quarter. Business feedback revealed that a combination of recovery spend from COVID-19, and increased market demand especially in the area of tourism have boosted sales as well as overall general business conditions during the September quarter. However, while these indicators remain above 50 and therefore represent an improvement, they have fallen slightly from the June quarter and are expected to fall further in the December quarter.

After taking a dramatic turn for the worse in the previous quarter, business confidence has further deteriorated as a result of a number of compounding issues continuing to impact Queensland business. Cost challenges are many and are collectively leading to the erosion of business viability. These issues remain largely unchanged from the previous quarter and are acting as a significant drag on business confidence:

> 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.

It is unsurprising that both operating costs and labour cost indices remain at extremely high levels, well above their respective long-term averages. However, labour and operational costs may have reached their peak as they are starting to ease, albeit by only modest levels, with marginal improvements expected in the December quarter. Though the forecasted indices remain incredibly high.

As a result, and despite improved sales, the profitability index continued to worsen though it is expected to marginally improve in the December quarter. The lack of confidence is also clearly driven by macroeconomic factors such as:

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

> Lack of staff availability including skill and labour shortages

> Lack of availability of affordable accommodation and rental housing

> Global geopolitical issues such as the war in Ukraine

> Reduced consumer confidence and emerging fear of a recession

In general, the above revenue and cost concerns and their persistence are causing an expectation of weaker economic growth over the next 12 months for both Queensland and the National economy 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

This Pulse’s hot topic questions focused on Queensland business’s economic recovery and mental health challenges.

The compounding pressures from significant cost challenges and macroeconomic factors on Queensland business are having a resulting impact on the mental health of Queensland businesses. 53% of respondents indicated that they, or someone in their business, are experiencing mental health challenges.

Excerpt Quotes from businesses

"I worry about the interest rate hike, the increases in fuel and already we are seeing the closing of smelters in Europe affect our ability to source materials."

– Central Queensland Business

"Spending will drop due to other price increases of food fuel & rent which will impact spending and thus slow down economy and cause other ongoing financial problems which must be fixed to assist with families & middle-class spending money as well as international students and workers coming to spend money in all states and territories to boost the economy."

– Brisbane Business

"I believe the biggest effect on the economy is consumer confidence, I believe there is plenty of optimism in the economy and think we are looking strong for the next 5 years, especially in South East Queensland there is a lot of money being spent on infrastructure and tourism is back."

– Gold Coast Business

"Very low profit margins, competition in the local market from multinational companies that do not employ Queensland workers."

– Far North Queensland

Regional Comparison Overview

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