NSW BUSINESS CONDITIONS DECEMBER 218 Quarterly snapshot of NSW economy informed by the businesses of NSW
NSW THIS QUARTER The NSW Business Chamber s Business Conditions Survey points to tougher trading conditions in the December quarter and continues the decline in business conditions recorded over the last year. While the NSW economy has performed very well over the last four years, factors such as the drought, a weaker housing market and political uncertainty are clearly of concern to business. NSW s $9 billion infrastructure investment pipeline will help to underpin business confidence, however, ahead of the state election it is essential that both sides of politics commit to measures that provides business with the confidence to invest and create additional employment opportunities. Put simply, there will be less money for government to invest in schools, hospitals or roads if businesses across NSW stop investing and employing. In the lead up to this state election, the NSW Business Chamber has identified four areas to Keep NSW Number 1 (https://www.nswnumber1.com.au/). 1. Skill NSW for the future and tackle youth unemployment 2. Cut energy costs for NSW businesses and residents. Improve the delivery of major infrastructure. Protect NSW from natural disasters Full survey results including detailed regional and industry-level data can be found at the NSW Business Chamber website located at: https://www.nswbusinesschamber.com.au/issues/business-surveys/business-conditions Survey Contact: Laurence Redaelli laurence.redaelli@nswbc.com.au 2 958 791) NSW BUSINESS CHAMBER The NSW Business Chamber is one of Australia s largest business support groups, with a direct membership of 2, businesses and providing services to over, businesses each year. The Chamber works with businesses spanning all industry sectors including small, medium and large enterprises.
NSW ECONOMIC SNAPSHOT Unemployment rate.% Near full employment and the lowest in the country (among states). 2¾ per cent growth In Gross State Product forecast for 218-19. 111, new jobs over the past year Employment growth above trend and second fastest in the country..7 per cent growth in State Final Demand Well above trend but only fourth fastest in the country (among states and territories). Source: ABS, NSW Government, NSW Business Chamber $1.7bn in private capital expenditure Over the past year, 11.7% higher than the same time last year. The bottom line Business confidence remains subdued despite a strong labour market and a $9bn infrastructure pipeline and robust demand. Industry indicators suggest NSW is facing headwinds in some areas. INDUSTRY INDICATORS NSW Retail Turnover NSW Visitor Arrivals NSW Building Approvals Per cent 7 6 Growth (YoY) Million.5.25 Visitor arrivals: NSW (Past 12 months) $Bn 5 Residential Non-Residential 5 2 2 1 2.75 1 2.5 Source: ABS Note: Seasonally Adjusted Note: Arrivals by state of main stay, unadjusted for seasonal variation Note: By value, Seasonally Adjusted
SURVEY RESULTS December quarter bounce did not materialise in 218 Performance of the NSW Economy Staff Numbers and Capital Spending Individual Business Performance 5 2 1-1 -2 - Current Expected -2. -.1 15 1 5-5 -1-15 -2 Number of Employees 7. Capital Spending 1. 5 2 1-1 -2 - Operating Costs Sales Revenue Profits 5.7. -16.1 Note: Index scores are calculated as the percentage of respondents reporting an increase minus the percentage reporting a decrease. A positive number implies improving business conditions (except for operating costs for which it implies cost pressures) whereas a negative number implies weaker conditions. There were 778 respondents to the survey. OVERVIEW It is now clear from successive surveys that business conditions have become more challenging and that momentum has slowed. Business confidence remained subdued this quarter with businesses facing tougher trading conditions as the NSW economy slows down and headwinds from international markets, volatility in the housing sector and pending state and federal elections in 219 create uncertainty. The uptick in business confidence often observed in the December quarter did not materialise. A significant fall in respondents expectations for the March quarter suggests a sharper drop in confidence levels than what can be observed from the Current quarter index (which is not seasonally adjusted). Sales revenue continued to fall, a particularly disappointing result given many businesses rely on the pre-christmas period to boost sales. This has had a flow on effect for the profits index which also fell. On a positive note, staffing levels remain above trend, a reflection of NSW s strong employment growth with the state near full employment. Additionally, respondents reported an increase in levels of capital spending compared to the previous quarter. 16 15 1 1 12 11 1 9 Business confidence* relative to June 21 (Index: June 21=1) Pre-Christmas Jun-1 Sep-1 Dec-1 Mar-1 Jun-1 Sep-1 Dec-1 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 *Index measuring respondents perceptions of the performance of the economy in the current quarter (December). Source: NSWBC Business Conditions Survey Full results: https://www.nswbusinesschamber.com.au/issues/business-surveys
REGIONAL PERFORMANCE Region Business Confidence # December Quarter (Index) Past Four Quarters (Index) Unemployment rate* Youth Unemployment* NSW -.1 (n=76) 2.2 (n=66).% 9.8% Sydney -5.9 (n=185) 5. (n=8).2% 9.% Central Coast 22. (n=1) 9.7 (n=186) 5.7% 1.2% Capital Region -6.1 (n=) 1.8 (n=166) 5.1% 9.8% Central West 2.5 (n=) 5.2 (n=19) 5.9% 8.6% Coffs Harbour - Grafton 6.5 (n=1) -.9 (n=155) 8.9% 22.8% Far West and Orana -27. (n=22) -9.2 (n=12) 2.8% 5.% Hunter Valley ~ 16.7 (n=5) 5.8% 1.1% Illawarra -2.5 (n=) (n=15).9% 1.1% Mid North Coast -6. (n=5) 5. (n=21).7% 11.2% Murray -11.1 (n=5) 5. (n=221) 7.7% 1.2% New England and North West -18. (n=6) -1.1 (n=269) 7.% 15.2% Newcastle and Lake Macquarie 22.5 (n=) 18. (n=197) 5.5% 1.5% Richmond - Tweed (n=59) -6. (n=268) 5.1% 9.9% Riverina -. (n=5) 5. (n=221) 5.7% 15.7% Southern Highlands and Shoalhaven -.8 (n=16) -7.1 (n=7) 6.% 7.7% *November 218, annual averages used for regional unemployment rates (excluding NSW). ~Insufficient responses were received. #Index is calculated as the percentage of respondents reporting a stronger economy minus the percentage reporting a weaker economy. A positive number implies improving conditions while a negative number implies conditions are weaker. Full regional results available at: https://www.nswbusinesschamber.com.au/issues/business-surveys/business-conditions CONFIDENCE MAP^ Far West and Orana New England and North West Hunter Richmond - Tweed Coffs Harbour- Grafton Mid North Coast ^Confidence Map Weighting is based on business confidence levels over the past four quarters Murray Riverina Central West Capital Region Newcastle Central Coast Sydney Illawarra Southern Highlands and Shoalhaven Relatively Weak Below Average Above Average Relatively Strong Source: ABS, NSWBC Business Conditions Survey