Business is good

Confidence continues to ride high with 87 per cent of WA companies in the latest CCI-BankWest Survey of Business Expectations saying the state economy will be strong or strengthen in the next year. But the respondents indicated the strong prevailing economic environment was causing increased cost pressures, stemming from tight labour market conditions and high supply prices. Nearly half indicated their labour and input costs had risen during the quarter. CCI economist Noel Richards said businesses did not expect cost pressures to ease in the short term. Many thought costs might rise even higher. Capacity utilisation remained high at 82 per cent this quarter following a record high of 83 per cent in December. With businesses reaching the limits of their production capacity, about 40 per cent of respondents said they wanted to expand their capital base over the next year. As a result, the index of anticipated capital spending reached its highest level this quarter since the measure began in late 1997. While capital expansion is on the cards for many businesses, finding suitable workers is still proving tough. Nearly two thirds of respondents to the March survey said they considered labour in WA to be scarce.

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