Businesses are scrambling to make rapid changes to adapt and survive the economic impact of COVID-19, according to the latest quarterly Business Conditions Survey, released by the region’s peak business organisation, the Illawarra Business Chamber.
The special COVID-19 edition of the survey clearly shows the nature and extent of the impact that multiple economic shocks have had on the regional and State economy over the first quarter of 2020.
“The responses from Illawarra business owners are no surprise, but at the same time make for very sober reading,” says Illawarra Business Chamber Executive Director, Adam Zarth.
“The survey shows the transition from early-phase impacts relating to supply chain interruptions and reduced overseas visitor arrivals to the full-scale economic crisis we are now seeing.”
Business conditions have deteriorated rapidly, with a doubling of COVID-19-related revenue losses reported by respondents between weeks one and two of the survey period.
“Businesses have had to enter hibernation with significant adjustments to staffing levels and capital spending, and it’s clearly the case that some won’t make it through to the other side,” says Mr Zarth.
The impact of COVID-19 on confidence is most apparent when examining business expectations for the next quarter where confidence has fallen at an unprecedented rate.
“In the Illawarra, 60 per cent of businesses have reported falling sales revenue and 65 per cent have reported falling profit.
“We’ve seen marked changes in capital spending and staffing, with 42 per cent of businesses reporting lower levels of investment and 21 per cent decreasing their staffing profile at the time of the survey.
“By now we expect this to be much higher.
“In the space of four months, businesses in the Illawarra have shifted their focus from expanding their capacity to meet demand to seeking to remain solvent and downsizing.”
However, the survey also indicated an ability to keep the doors open in some circumstances.
“75 per cent of businesses have indicated they will be able to continue operating; many with a significantly reduced capacity (45 per cent) while others may be largely unaffected (22 per cent).”
Mr Zarth stressed the importance of every tier of government doing all that is possible to keep businesses in operation and staff employed through this difficult time.
“It is critical that every tier of government do all that is possible to keep businesses in operation and staff employed.
“When given the all clear to resume normal business operations, we need to be in the best possible position to do that as quickly as possible.”