The latest Bank SA state monitor survey also found many businesses have adopted a wait-and-see approach to large decisions until they can see signs of economic improvement.
That caution has trickled down to the shopfloor with businesses displaying some reluctance to hire.
In the country, businesses surveyed during October and February felt the economic pinch and their optimism plummeted.
Their customers, on the other hand, are some of the most confident in the state.
During the survey period, the Pinery bushfires raged on the outskirts of Adelaide killing two people, Leigh Creek closed its coal mine, Arrium announced it would cut 250 workers from its steel operations and Belgian businessman Guido Dumarey’s Punch Corporation offered a glimmer of hope to Holden workers.
The bank’s chief executive Nick Reade said business confidence had fallen to the lowest recorded level since May 2013.
“The subdued state of the economy and the impact of low economic growth on wages, job security and employment mobility continues to constrain consumer sentiment … which is constraining investment and a willingness to hire more staff,” he said.
“There are obviously exceptions, but the prevailing view among many local businesses is to wait until broader market conditions improve before making any major decisions regarding growth.
The results of the survey, which has recorded SA’s business and consumer confidence since 1997, were drawn from questions to 300 consumers and 300 small business owners and managers between October last year and February.
The report measured businesses confidence had dropped 5.3 points to 99.9 since October last year.
Consumer confidence had slightly improved, up 0.5 points to 100.6 points during the same period.
Rural business confidence fell a considerable 8.1 points to 97.2.
That pessimism wasn’t felt by rural consumers whose confidence levels rose 5.3 points from 93.2.
Consumer confidence in the Southern region, covering the South Coast, South East, Hills and Murray Plains areas, rose 14 points while business confidence in the region had dropped 16.8 points, the largest fall recorded in the survey.
“It’s encouraging to see that consumer confidence in South Australia is fractionally up since the last survey, however, it is still low by historical standards,” Reade said.
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