25/05/1999 - 22:00

Business confidence falters in March quarter

25/05/1999 - 22:00


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WA BUSINESSES are becoming more pessimistic, the latest WA Chamber of Commerce and Industry–BankWest Business Survey has found.

Business confidence falters in March quarter
WA BUSINESSES are becoming more pessimistic, the latest WA Chamber of Commerce and Industry–BankWest Business Survey has found.

The survey shows the emerging optimism recorded in the December quarter has dissipated to the point that confidence is now below the national level.

In the March quarter survey of 400 companies, the number of firms expecting the WA economy to worsen over the next year increased from 17 per cent of the sample to 44 per cent.

WACCI senior economist Dan Engles said it was disappointing but not surprising that confidence was again in decline.

“WA runs a two-speed economy. The resource and primary industries generate the activity that is then carried through into the service and retail sectors,” Mr Engles said.

“Demand flowing from earlier investment in resources is now slowing and players in the domestic economy – who have recently been experiencing good trading conditions flowing from past investment – recognise there is a downturn ahead in development and that business could get tight.”

Already WA’s resource exploration and drilling industries are feeling the pinch.

The Australian Geologists Skills and Employment Advancement Net-work’s Keith Wells said 50 per cent of WA’s 3,000 geologists were either un- or underemployed.

Additionally, Australian Bureau of Statistics figures show exploration spending fell consecutively over the past six quarters.

Hiring intentions identified in the survey also reflect a bleak outlook.

Employment in manufacturing and other industry sectors is expected to fall during the coming quarter but should remain positive in the services sector.

Labour availability is increasing and wage pressures are easing.

Survey respondents expect the number of overtime hours worked during the June quarter to be down.

The seasonal improvement in activity over Christmas and the summer months appears to have ended.

The survey showed that turnover and profitability were down on expectations though export sales were higher.

Capital expenditure, particularly on plant and equipment, was reported to be lower than expected and many companies have put their investment plans on hold.

During the March quarter, 37 per cent of survey participants in the ‘other industries’ category, that includes mining, reported lower capital expenditure.


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