Business confidence remains weak as businesses feel the impact of high interest rates

Latest results of the March Quarter Pulse Survey indicates that Queensland business confidence in the performance of the national and state economies remains weak.

Latest results of the March Quarter Pulse Survey indicates that Queensland business confidence in the performance of the national and state economies remains weak.

This is a continuation of the weak business confidence observed in previous quarters. Business confidence, measured by outlook for the performance of the National and Queensland economies over the next twelve months, remains at weak levels with little change to either index.

Previous quarters have highlighted the weak business confidence was a result of steady business performance being undercut by cost pressures, however this quarter has seen business performance weaken while cost pressures remain.

The online Pulse Survey of Business Conditions collected responses from Queensland businesses during the period of April 4 - April 25 2023 on business sentiment and activity for the March quarter 2023. 436 businesses responded to the survey.

Cost pressures and labour shortages remain high and are not expected to alleviate significantly in the June quarter.

Business feedback revealed that decreased demand and economic activity attributed to inflation and interest rates have resulted in a decline to business performance in the March quarter.

While retaining and recruiting suitable employees is still the top constraint for Queensland businesses, its severity has eased since the December quarter.

The constraints on business growth has revealed that the impact of recent interest rate increases on consumer spending is being felt by Queensland business

The level of demand and economic activity has re-entered the top five constraints on growth, and interest rates have risen to second place the first time since March 2010. In contrast, direct wage cost has dropped out of the top five constraints for Queensland businesses.

Latest results of the March Quarter Pulse Survey indicate that general business conditions and total sales and revenue have remained satisfactory, however both indices have fallen since the December quarter (7.7 and 7.1 respectively). Business feedback has attributed this decreased demand to interest rates and the impact on consumer spending and confidence.

The profitability index decreased by 5.6 points from to 40.9. More than six in ten (63%) of businesses have indicated their profitability weakened during the March quarter. The profitability index is below this time last year (37.2) and is below its 10 year average (40.5).

Queensland businesses anticipate their profitability to continue to decrease in the June quarter. However, the index is expected to hit satisfactory levels at 41.2.

To find out more about the Pulse Survey, visit www.businesschamberqld.com.au, or contact Business Chamber Queensland on 1300 731 988.

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