Australian Business Leaders Remain Optimistic About Growth While Battling Inflation Challenges, Second Annual J.P. Morgan Survey Finds
SYDNEY--(BUSINESS WIRE)--Jan 10, 2023--
The majority of Australian midsize business leaders are grappling with rising costs and challenges driven by inflation (71%). At the same time, nearly six in ten (59%) feel confident about the global and national economy, and expect their revenue (77%) and profits (74%) to increase in the year ahead, according to J.P. Morgan’s second annual Australia Business Leaders Outlook survey.
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Economic outlook for 2023 (Graphic: Business Wire)
“Australian business leaders continue to demonstrate their resilience as they skillfully manage various geopolitical and economic obstacles,” said Annabelle Mooney, Head of Commercial Banking, Australia and New Zealand, J.P. Morgan. “While they see potential for growth in the year ahead, they’ve had to be nimble, adopting and deploying new strategies in response to changing market conditions.”
In a survey of 200 senior executives of Australian midsize companies, the theme of optimism is clear with less than half (46%) of local business leaders expecting a recession in 2023—reflecting lower expectations than their recently surveyed counterparts in the U.S. (65%), U.K. (69%), India (61%), Germany (59%) and France (53%).
“As we continue to withstand a complex and evolving economic environment, Australian midsize business leaders are proving once again that they have the agility to keep pushing forward and combat the challenges that arise,” said Robert Bedwell, Chief Executive Officer, J.P. Morgan Australia and New Zealand.
Mitigating Inflation and Supply Chain Disruptions
With headwinds of elevated inflation spanning economies around the world, seven in ten (71%) Australian midsize business leaders have experienced rising costs as a result. Of those facing inflation challenges, over two-thirds (67%) report that the increased cost of energy, as well as rising interest rates and cost of capital (61%) are driving higher business costs.
The top ways decision makers are tackling inflation are through raising prices (43%), automating more processes (43%) and changing their pricing models (42%). To further mitigate costs, nearly half (45%) of Australian midsize companies are passing up to one-quarter of their increased costs onto consumers—with more than eight in ten (83%) saying they are likely to continue increasing prices.
In response to supply chain disruptions, less than half of respondents (40%) note that pressures have gotten worse over the past 12 months, and one-third (33%) say they have gotten better. To counteract ongoing supply chain challenges, business leaders are allocating more funds to cover increased costs related to moving products (41%) and shifting manufacturing and distribution closer to key markets (41%).
Navigating a Tight Labour Market
The Australian labour environment remains top of mind for midsize business leaders, with over half (52%) expecting to add headcount in the next year. As they contend with a high demand for labour, of those preparing to hire more, they are:
- Offering flexible work hours (54%)
- Giving employees flexibility on where they work (51%)
- Offering upskilling and training opportunities (51%)
- Increasing wages and benefits (49%)
Elevating What Success Looks Like Through Corporate Responsibility
In the year ahead, Australian midsize business leaders are focusing on the importance of corporate responsibility factors, citing social (57%) and environmental (51%) factors, and diversity, equity and inclusion (57%) as most important to their business strategies—up 14%, 14% and 16% respectively from 2022.
Top outcomes of these corporate responsibility efforts are rooted in improving employee retention (52%) and building company culture (50%), up 4% and 11% respectively from last year.
Preparing for the Future
As Australian midsize business leaders prepare for the future, over half expect to expand into new distribution channels (53%) and new geographical markets domestically (51%), and plan to introduce new products and services (44%).
Six in ten business leaders shared they are not planning to sell or transfer ownership at this time, up 36% from 2022. For leaders considering a full or partial transfer, 30% intend to sell to a third party or management group—with 19% planning to transfer to family through a gift, up 12% from 2022. More than seven in ten (72%) of respondents are expecting transfers to take place within the next two years.
For more information on the 2023 Australia Business Leaders Outlook, visit jpmorgan.com/business-outlook-AUS.
J. P. Morgan’s Australia Business Leaders Outlook survey was conducted online from November 21 – December 8, 2022. In total, 200 business leaders (CEOs, CFOs, heads of finance and owners) from Australian midsize companies (annual revenues ranging from $20 million to $2 billion AUD) across various industries participated in the survey. Results are within statistical parameters for validity, and the error rate is +/- 7.0% with a 95% confidence level.
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PUB: 01/10/2023 03:00 PM/DISC: 01/10/2023 03:02 PM