All industries by state

South Australia

South Australia has a traditional economy that isn’t subject to the boom and bust cycles seen in other states. As a consequence, most of the results for South Australian businesses in this edition of the PwC Private Business Barometer are on or close to trend. Business growth across the state was positive and slightly above average. Business owners and managers remain optimistic but slightly conservative about their future prospects.

Some business sectors such as defence have been performing well, while others such as the wine industry continue to have difficulties. PwC is seeing a renewed interest in transactional activity in the wine industry. Generally, PwC has seen a renewed interest in merger and acquisition activity across the state.

The public sector represents a significant proportion of the state economy, so everything the government does affects business. PwC would like to see the state government providing more facilitation and encouragement for South Australian businesses, as governments in Queensland and Victoria have done.

Business growth Steady growth hides a complex picture Private businesses in South Australia told us they experienced steady growth in sales and profits of eight per cent over the past year, which is slightly above the national average. PwC has seen strong activity in defence and there is also great enthusiasm for resources, but most projects in the state are in the exploration and proving stages. By contrast, the wine industry has continued to struggle over the past 12 months.
Slight trends towards undershooting revenue targets The number of South Australian businesses that exceeded their revenue targets has fallen slightly since the last PwC <em>Private Business Barometer</em> but this matched the increase in businesses that met their targets. The proportion of businesses that undershot their targets increased only slightly, but at 39 per cent was relatively high compared to the national average and was consistent with results in previous <em>Private Business Barometers</em>.
Modest targets for the short and medium terms When it came to setting future growth targets, South Australian private businesses were the most pessimistic, expecting 11 per cent sales growth for the year ahead and 20 per cent for the next three years. This is consistent with falling levels of confidence and a general air of concern that PwC has witnessed among South Australian businesses. More so than companies in other states, South Australian businesses told us they expected to expand by organic growth (55 per cent nominated this as a growth strategy for the short term and 48 per cent for the medium term). Businesses in the state also had a reasonable appetite for expanding into new product and geographical markets. However, considering the levels of business confidence across the state, PwC questions whether South Australian companies can achieve their sales forecasts while relying so heavily on organic growth.
People Graduates seek opportunities elsewhere The lack of qualified candidates was the most common reason South Australian private businesses gave for not hiring staff. PwC understands businesses in some areas are struggling to attract and retain talented staff, particularly university graduates. South Australia may not offer the exciting lifestyle and opportunities that appeal to younger people, who instead follow their dreams interstate and overseas.
Funding Looking to make investments Close to half (44 per cent) of South Australian businesses told us they were planning a major investment in the coming 12 months. This was the highest result of all the states and territories. This figure closely correlated with the number of South Australian companies reporting that they had plans to develop new products or expand geographically in the short term.
Business operations No stand-out issues holding businesses back While businesses in many states had one stand-out issue they nominated as their main challenge, South Australian companies were fairly evenly divided between people, funding and business operations problems. Similarly, when asked about factors that would prevent them from achieving their growth targets, South Australian businesses nominated global economic conditions and consumer and business confidence with similar frequency. In addressing the skills issue, South Australian businesses have been using lifestyle as a recruitment tool. South Australia is widely regarded as offering a good quality of life and businesses in the state also have a stronger focus on work-life balance than those in some other states. While this may not appeal to university graduates, it is an effective inducement for older workers and those who have children.