NSW BUSINESS CONDITIONS SEPTEMBER 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. Factors such as drought are weighing on regional businesses with business confidence declining. Revenue has been trending down while operating costs remain relatively high. Despite some weakness evident in this survey, we expect a better result next quarter. Broader economic measures such as the national accounts and labour market indicators remain strong for NSW, even though other states are closing the gap. The NSW labour market remains the most obvious beneficiary of the state s economic successes with near full employment and more than 15, jobs created over the past year the best set of figures in the country. 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 For more information on the survey, please contact Laurence Redaelli (laurence.redaelli@nswbc.com.au 2 9458 7913) 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 3, businesses each year. The Chamber works with businesses spanning all industry sectors including small, medium and large enterprises.
NSW ECONOMIC SNAPSHOT Unemployment rate 4.7% Near full employment and the lowest in the country (among states). 151, new jobs over the past year Employment growth above trend and fastest in the country. 3.5 per cent growth in State Final Demand Well above trend but fourth slowest in the country (among states and territories). 2¾ per cent growth In Gross State Product forecast for 218-19. $3.7bn in private capital expenditure Over the past year, 8.5% higher than the same time last year. The bottom line Our survey points to tougher trading conditions in the September quarter, primarily due to the impact of the drought, with 84 per cent of businesses indicating they were affected. Source: ABS, NSW Government, NSW Business Chamber INDUSTRY INDICATORS NSW Retail Turnover NSW Visitor Arrivals NSW Building Approvals Per cent Million $Bn Residential Non-residential 7 6 5 Growth (YoY) 3.5 3.25 Visitor arrivals: NSW (Past 12 months) 5 4 4 3 3 3 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 Drought takes some of the shine off NSW Performance of the NSW Economy Staff Numbers and Capital Spending Individual Business Performance 5 4 3 2 15.4 15 1 5 6.9 5 4 3 2 39.2 1-1 -2-3 Current -3.5 Expected -5-1 -15-2 Number of Employees -1.6 Capital Spending 1-1 -2-3 Operating Costs Sales Revenue Profits 3.6-9.4 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 762 respondents to the survey. OVERVIEW Business confidence took a hit for the quarter primarily due to the impact of the drought. Our survey reaffirms the impact of the drought with New England and North West, and Central West experiencing the sharpest deterioration in confidence this quarter. Newcastle and the Lower Hunter continue to impress as the strongest performers across the state. Sydney has failed to buffer some of the weaker results observed across the state with retail trade and rental, hiring and real estate service businesses weighing most heavily. Despite this, underlying conditions for Sydney respondents appear to remain strong particularly in the key areas of profitability and staffing. Seasonal factors are also at play with accommodation and food services and retail particularly weak across the board. Also notable is a divergence in the capital spending and staffing indices, which typically move together as businesses expand or contract. A deterioration in reported levels of capital spending reinforces the Drought Survey's finding that many regional businesses are delaying major capital spending decisions until conditions stabilise, while reported staffing levels reflect broader strength in employment growth over the past year. QUOTES For the first time since June 213, more respondents reported a modest decline in the performance of the NSW economy than their more optimistic peers. Our survey reaffirms findings from the Chamber s recent Drought Survey which showed drought conditions are having a material impact on the state s regional economies. Sydney is experiencing weaker conditions, evident in areas such as retail and real estate. The weaker results evident this quarter can, at least to some extent, be explained due to seasonal and temporary factors. Positive staffing results and respondent s positive outlook for the economy provides a basis to anticipate a better result next quarter. Source: NSWBC Business Conditions Survey Full results: https://www.nswbusinesschamber.com.au/issues/business-surveys 4
BUSINESS NEEDS IN FOCUS In August the Chamber asked respondents about the impact of the drought. Below is an overview of the survey results which can be found at: https://www.nswbusinesschamber.com.au/issues/business-surveys/other-business-surveys 84 per cent indicated they were impacted by the drought, 43 per cent of which said the current drought was far more severe than previous droughts. Approximately 1 in 3 affected businesses indicated the viability of their business was at risk due to current drought conditions. 4 in 5 affected businesses indicated cash flow had been affected due to drought conditions. More than 2 in 3 affected businesses indicated they would scale back investment and reduce capital compared to previous plans. On average, affected businesses indicated they may have to reduce staffing levels by 1.5 employees. 67% of businesses indicated that their local economy had been weakened due to drought. Note: Affected businesses refers to respondents indicating they had been impacted by the current drought. DROUGHT IMPACT^ Richmond - Tweed New England and North West Coffs HarbourGrafton Far West and Orana Mid North Coast Hunter Central West Murray Illawarra Riverina ^Weighted revenue losses reported by respondents indicating they have been affected by current drought conditions. Down 4% Down 2% Capital Region Down % Insufficient Business Responses Newcastle Central Coast Sydney Southern Highlands and Shoalhaven
REGIONAL PERFORMANCE Region Business Confidence # September Quarter (Index) Past Four Quarters (Index) Unemployment rate* Youth Unemployment* Sydney.5 (n=28) 9 (n=852) 4.3% 9.1% Central Coast 2.1 (n=47) 14.5 (n=193) 5.9% 15.5% Capital Region -2.8 (n=36) 6.4 (n=171) 4.9% 7.6% Central West -13.2 (n=53) 1.4 (n=22) 5.2% 7.3% Coffs Harbour - Grafton -11.6 (n=43) -.6 (n=161) 8.6% 22.9% Far West and Orana (n=26) -6.6 (n=122) 3.1% 4.6% Hunter Valley ~ 33.7 (n=86) 5.6% 13.4% Illawarra -9.1 (n=22) 3.6 (n=167) 4.4% 11.3% Mid North Coast (n=43) 12.9 (n=186) 4.6% 11.9% Murray 7.5 (n=53) 12.4 (n=194) 8.8% 19.2% New England and North West -35.1 (n=57) -5.6 (n=25) 6.6% 16.9% Newcastle and Lake Macquarie 33.3 (n=12) 23.5 (n=234) 5.7% 1.3% Richmond - Tweed -3.4 (n=58) -3.2 (n=253) 4.8% 8.7% Riverina 1.5 (n=38) 11.9 (n=218) 6.% 15.% Southern Highlands and Shoalhaven -11.8 (n=17) 6.3 (n=8) 7.6% 12.4% *August 218, annual averages used for regional unemployment rates. ~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