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Illawarra businesses optimistic about the NSW economy but ominous signs dampen positivity

Release Date: 9/02/2015
The Illawarra Business Chamber’s (IBC) NSW Business Conditions Survey of businesses across the Illawarra region shows improved business conditions for the December 2014 quarter for a range of key indicators such as profitability, sales revenue and staff numbers.
“In December, Illawarra businesses were more positive about the NSW Economy than anywhere else in the state and the local profitability index was second only to the Mid North Coast” said IBC CEO Debra Murphy.
Although still in negative territory, the number of Illawarra businesses reporting improved profitability reached its highest level since June 2012 when the local survey began.
Improving local profitability is being driven by strong revenue results. However, soaring operating costs continue to hinder the growth of Illawarra businesses. Almost half (46%) of Illawarra businesses reported that their operating costs went up in the December quarter and 37% are expecting a further hike in the March 2015 quarter.
 “Businesses’ growth prospects are being hampered by rising electricity, wage and overhead costs” said Ms Debra Murphy.
“While I’m glad to be able to report some positive news in the Illawarra business environment, I’m afraid there are some ominous signs that things might be about to change” said Ms Murphy.
For the first time in the history of the Business Conditions Survey, Illawarra businesses are expecting the NSW economy to perform worse in next quarter than the current quarter.  
“Entrepreneurs tend to be optimistic by nature which is why we have always seen business leaders predict a stronger NSW Economy in the upcoming quarter. I’m concerned that the pessimistic economic expectations may point to challenging times ahead” said Ms Murphy.
Performance of the economy has historically lagged capital spending.  The December quarter saw a downturn in Illawarra businesses’ capital spending which also points to an upcoming economic slowdown.
“Political uncertainty severely reduces business confidence. Back in December Illawarra businesses raised concerns about the political landscape and this uncertainty has only escalated in 2015.” said Ms Murphy.
“Small businesses rely on Governments making sensible decisions about both the budget and the economy and the current federal government is not doing this” said one Illawarra business owner.
“2014 ended on a positive note and I would love to see this continue into the New Year. However, when preparing for the year ahead businesses should pay close attention to the business environment” said Ms Murphy.
Media Contact:         Julia Frith 0417 135 858

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