Businesses doing it tougher now than during COVID lockdowns

Businesses are doing it tougher now than at any time during the COVID-19 pandemic, according to a grim new analysis of an Australian Bureau of Statistics (ABS) report.

Three consecutive interest rate rises and soaring fuel costs saw half of all Australian businesses report rising operating expenses last month, according to Primara Research’s analysis commissioned by Fishbowl Inventory of the ABS Business Conditions and Sentiments survey.

That figure is higher than at any point during the pandemic.

At the same time, falling consumer confidence and rising interest rates are leading Australians to tighten their belts and cut back on unnecessary spending, with more than a third of businesses seeing sales drop.

But unlike during the COVID pandemic, there is no government stimulus cushioning the impact.

The transport industry has been the hardest hit, with 56 per cent of businesses in the sector reporting it is now difficult or very difficult to meet their financial commitments.

Read more

Australia signs new agreement in blow to China

The trucking industry had been sounding the alarm that the industry was at risk of collapse before conflict in the Middle East sent the price of diesel soaring.

There has seen some relief since April, when the federal government temporarily halved the fuel tax excise and removed the Heavy Vehicle Road User Charge (RUC), but that assistance will start tapering off from this Wednesday, July 1.

However, the transport industry is not alone, with an overwhelming 72 per cent of businesses reporting that fuel prices or availability was having a negative impact on business.

Medium-sized businesses with fewer than 200 employees are feeling the pinch the most, with 56 per cent stating operating costs had increased in the past month – the highest level ever recorded in the ABS survey.

Meanwhile, more than half (53 per cent) of food and accommodation businesses reported falling revenue in the past month – a low reached only twice before during pandemic lockdowns, when restaurants and cafes were forced to close or operate as take-away only.

The outlook remains bleak for many, with one in three businesses expecting their costs to rise again this month.

In a further blow to many businesses in food and retail, they will also be forking out more on employees’ wages as the 4.75 per cent minimum wage increase comes into effect.