No. 3 - Department of Treasury - The Western Australian Government

2006 No.3 Western Australian Economic SummaryThis was reflected in expectations of sales and profitability, which weresimilarly strong. Sensis attributed the decline in confidence to “anxiety overfuture economic issues such as fuel prices, consumer demand and interestrates.”While business confidence was strong during the quarter, businesses in theSensis Business Index survey continued to report growing cost pressures,characterised by higher fuel prices and wage costs, with the growth in thelatter being particularly marked (see Labour Market chapter for moreinformation on labour shortages).In a further indication of the cost pressures on firms, the CCI-BankWestSurvey’s index of input costs rose to a record high in September 1 , for thesecond consecutive quarter, increasing by 2.9% to 176. Despite theseincreases in costs, businesses reported having difficulty in passing on coststo their customers, due to competitive pressures (see Price Trends chapterfor more information on wages and other cost pressures).With labour and other constraints, it is not surprising that capacityutilisation was very high for Western Australian businesses during theSeptember quarter. The CCI-BankWest Survey found capacity utilisationremained high among respondents, whose capacity utilisation rate was 84%on average. This high level of capacity utilisation was virtually unchangedfrom the record levels reached recently 2 .90%Figure 22CAPACITY UTILISATIONMoving Annual Average - Actuals85%80%75%Q2 1996 Q2 1998 Q2 2000 Q2 2002 Q2 2004 Q2 2006Australia Western Australia Australia - MiningSource: NAB Quarterly Business Survey1 This index has been included in the CCI-BankWest Survey since December 1997.2 Capacity utilisation has also been included in the CCI-BankWest Survey sinceDecember 1997.Department of Treasury and Finance 35