28/08/2008 - 06:25

Shine comes off WA business

28/08/2008 - 06:25

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Australia's economic downturn is starting to bite Western Australian businesses, according to the August Sensis Business Index released today.

Australia's economic downturn is starting to bite Western Australian businesses, according to the August Sensis Business Index released today.

The survey, which provides the latest snapshot of small and medium business activity (up to 199 employees) in Australia, interviewed 1,800 businesses from July 31 to August 22.

Overall, 55 per cent of the state's small businesses have been affected by the current economic environment. In line with more challenging trading conditions, business confidence fell 12 percentage points to 43 per cent.

That's a drop of 29 percentage points since June 2007.

Western Australia now has the nation's fourth strongest business confidence, behind Tasmania, Queensland and the Northern Territory. That is reflected in WA's confidence in the state government, where the latest Sensis report found that support for the policies of the WA government remained stable at 22 per cent.

The key reasons the state's small businesses approve of the government's policies include the perception it has done nothing wrong, that it encourages growth opportunities, and because of trading hours. The major reasons for disapproval include perceptions there is too much red tape and lack of infrastructure and because of payroll tax and trading hours.

Christena Singh, the report's author, said businesses throughout WA have experienced a contraction in consumer demand, profit and business confidence since May.

"Western Australian businesses are still clearly enjoying better conditions than their counterparts in the eastern seaboard," she said. "However, the national economic environment is starting to have an impact on Western Australian businesses, particularly as inflationary remain strong for the state."

The three biggest concerns for small business in WA at the moment are finding staff, lack of work and cash flow, Ms Singh said.

Demand for goods and services have deteriorated strongly since May, with the sales indicator at the lowest level since August 2001. Profitability for the sector was also further eroded, with one-third of businesses experiencing a decline in profit.

Despite difficulties in finding staff, employment throughout the state has grown strongly since May and is at the strongest rate in the nation.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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