Latest insights from BankSA show a decrease in confidence across South Australian households and businesses over the past few months, largely due to increasing caution about spending over the coming year.

Business confidence decreased by 8.7 points to 110.5 points and consumer confidence has decreased 1.2 points to 111.2, since October 2022.

However, despite the current economic uncertainty, South Australians are remaining resilient and are adapting to meet their changing circumstances.

There are many factors in the broader environment that influence the sentiment of both consumers and businesses, and currently these are largely aligned for both.

They include petrol prices, world affairs, wages relative to the cost of living, the state of the world economy, interest rates and other countries’ influence on Australia’s economy.

While the recent lower-than-expected inflation figures were welcomed, the areas of housing, food and non-alcoholic beverages and transport remain stubbornly high.

BankSA’s economists expect the impact of inflation, higher interest rates and rents will continue to weigh on disposable income and spending throughout the remainder of 2023.

While households may be increasingly concerned about their financial position over the longer outlook, the research shows they are more positive about their current situation. This was reflected in an increase in people still planning to make a major purchase in the next few months.

With an eye on the longer term, South Australians are focussed on getting their finances on a stable footing, finding savings and reviewing household budgets for the remainder of 2023.

Households said they were also more concerned about finding suitable employment, despite historically low unemployment rates.

Businesses shared similar concerns, with overall confidence falling below consumer confidence for the first time since July 2020.

Sentiment about their current situation decreased, in addition to less confidence there will be an improvement in the next 12 months.

As a result, businesses are focussed on operating their business effectively rather than on growth and expenditure, with less appetite to make a major purchase in the year ahead.

Businesses also indicated they are less likely to hire additional employees over the coming months as labour pressures continue to ease from previous highs.

However, BankSA State general manager business David Firth said certain sectors are faring better than others, with a 33-point rebound in business confidence in the transport sector.

“This is likely due to supply chain capacity constraints starting to ease and more stable fuel prices,” he said.

“Agriculture has also seen an increase in confidence on the back of a record grain harvest.

“Labour pressures also continue to ease from previous highs, down a further 2 per cent.

“Access to migrant workers was a key reason, with only 9 per cent of businesses citing this as an issue now compared to 43 per cent in October.”