A new report reveals business confidence at its lowest point in 16 months with economic uncertainty and increased costs imposing more pressure on balance sheets.

The most informative temperature check of business conditions in NSW, the Business Conditions Survey, has uncovered continued quarter on quarter pessimism.

Business confidence has slipped to -70.8 down from -53.1 in February, according to a survey of almost 1000 NSW businesses. 

Business confidence is at its lowest ebb since the height of the Omicron wave in January 2022.  

One in four businesses is planning to cut staff in the next three months, the survey shows.

If business conditions do not improve, one in three will need to increase debt to survive.

Business NSW Executive Director David Harding says NSW businesses are feeling the pinch.

“In the space of one week we had one of the largest increases to the minimum wage in history, followed by the 12th interest rate hike since May last year,” Mr Harding said. 

“We have the RBA increasing interest rates to tackle inflation at one end, while on the other the Federal Government is implementing wage increases that exceed labour productivity growth.

"There is a lack of consensus between these two entities on how to best support our economy and increase productivity, leaving businesses on the ropes and full of uncertainty.”

Insurance has overtaken energy as the biggest expense concern for businesses – with further workers’ compensation premium increases from July 1 having an impact.

One in three (35 per cent) businesses is not investing in cyber security because they simply can’t afford it.

“With further disruption on the horizon in the form of proposed sweeping industrial relations reforms, NSW businesses are looking to government for decisions that provide optimism for the future,” Mr Harding said.

“Now the new NSW Government has its feet under the desk we look forward to hearing how they plan to revive confidence in our state’s businesses which are the engine room for the nation’s economy.”  

Key findings from the latest Business Conditions Survey include:

-  The Business Confidence Index has slipped to -70.8, a level near its all-time low. Businesses are hampered by the high cost of doing business and waning customer demand.

-  The impact of interest rate hikes on business continues to intensify. Businesses are most concerned about the impact on customer spending.

-  One in four businesses intends to reduce staff headcount in the next three months.

-  Of eight key business expense categories, insurance costs and energy costs are causing the most concern.

-  About 15 per cent of businesses have not taken any action to enhance cybersecurity management as they consider it irrelevant to their business. Close to 35 per cent have not taken any action due to affordability reasons.

-  Almost one in five survey respondents is completely unreceptive to the use of Artificial Intelligence.