UNCERTAINTY over interest rates and the spectre of major tax system changes has contributed to a slump in WA business confidence during the June quarter according to the WA Chamber of Commerce and Industry.This second successive fall has eroded what remained of the short-lived peak in confidence recorded last December in the CCI-BankWest Survey of Business Expectations.The latest survey canvassed more than 350 companies and found WA confidence in the national economy fell during June to its lowest point since 1998.The State medium-term outlook was also down, although to a lesser degree.The slump appears to be affecting the willingess of employers to hire more staff.For the first time since September, a higher proportion of firms reported lower staff numbers compared to three months earlier.Only the service industry reported higher employee numbers.The trend is also reflected in the proportion of companies working overtime hours, which has dropped 10 per cent to 21 per cent since Christmas.The number of firms expecting to increase capital expenditure fell from 30 per cent in March to 22 per cent.The sombre mood may, in part, be driven by weaker trading conditions experienced in WA during the June quarter with sales turnover and profitability generally down and not expected to improve in the short-term.On the bright side, export sales have lifted.Survey results show clear signs the cost of materials and supplies rose in June, although the prices charged to customers held relatively steady.The service sector has begun handing on cost increases, however.CCI senior economist Dan Engles said rising interest rates had dented confidence. Nervousness about the GST transition and business tax changes had compounded the mood.“After the buoyant signs six months ago, it is disappointing but understandable,” Mr Engles said.“It’s early days but there is reason to expect sentiment to lift by the next survey. The pressure on rates has receded, economic activity is holding up and with the GST now a reality there is some blue sky ahead.”
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