Australian midsized businesses are facing challenges rooted in the current labour market, supply chain disruptions and rising prices; yet, in the face of these obstacles, almost all expect growth (94%) and feel confident their businesses will thrive (80%) in the next 12 months, according to J.P. Morgan’s inaugural Australia Business Leaders Outlook Survey released today.
“Australian business leaders are finding ways to adapt to the evolving economic landscape,” said Annabelle Mooney, Head of Commercial Banking for Australia and New Zealand, J.P. Morgan. “In spite of headwinds, these midsize companies are primarily optimistic that growth is achievable and are well-positioned to navigate the challenges of today’s uncertain climate.”
In a survey of more than 200 senior executives from Australian midsize companies, there is optimism for the year ahead and confidence in their companies’ ability to grow—reflecting higher expectations than their counterparts in the U.S., U.K., Germany and France, according to J.P. Morgan’s recent surveys. They also remain confident in the global and national economy (63%), despite ongoing challenges stemming from the pandemic and the war in Ukraine. The challenges they cited most included a tie between labour concerns (27%) and rising prices (27%), followed by supply chain issues (18%). Their optimistic outlook could in-part stem from the new federal government taking office. In fact, more than half (56%) of Australian business leaders expect the recent election to have a positive impact on their business and just 6% foresee a negative impact, while others remain neutral.
“Despite the business environment appearing uncertain for the foreseeable future, we know the Australian business community is resilient and nimble,” said Robert Bedwell, Chief Executive Officer of Australia and New Zealand, J.P. Morgan. “We continue to see these organisations overcome volatility and keep pushing forward with their expectation of growth on the horizon.”
Getting Creative to Tackle the Labour Shortage
Even as optimism persists, most Australian business leaders (92%) cited feeling the effects of the current labour market as it continues to create obstacles for businesses across the country. As a result of the labour shortage, almost half of current employees (47%) are working more hours, and 44% of midsize businesses are seeing reduced sales/revenue.
In the hopes of retaining and attracting top talent, Australian business leaders are implementing:
- Increased benefits (50%)
- Upskilling or training opportunities (48%)
- Flexibility for work location (43%)
- Flexible working hours (42%)
Navigating Shifting Business Concerns, Seeking Growth
Supply chain disruptions (36%) and rising prices (27%), including energy and commodity prices, are also among the top challenges facing Australian business leaders for the year ahead. To manage supply chain issues, business leaders are making adjustments to inventory and suppliers by strategically stockpiling (50%), replacing or stopping business with certain suppliers (49%), or increasing prices for goods and services (43%).
Managing Impacts of the War in Ukraine
While the war in Ukraine continues to be a concern across the globe, nearly half (44%) of Australian business leaders expect the conflict to severely impact their business.
Of those who do expect to be impacted, nearly 9 in 10 (88%) believe the impact will continue through the end of the year and more than one-third expect to face supply chain issues (45%), higher energy prices (41%) and higher commodity prices (36%) as a result of the war.
Elevating What Success Looks Like Through ESG
With companies being held to a higher standard with regard to environmental, social and governance (ESG) factors, more than half (52%) of Australian business leaders expect corporate responsibility to be an increased focus area for their business in 2022. Fortunately, 44% of Australian businesses have a positive outlook on the global focus of ESG, because they believe they’re already meeting the requirements. Of the various ESG focus areas, social factors (43%), diversity, equity and inclusion (41%) and environmental factors (37%) were ranked as most important focus areas to their business strategy in the year ahead.
Planning for Succession
As Australian businesses prepare for the future, many (75%) are planning or considering a transfer of ownership–with over eight in ten (83%) expecting a complete transition within the next five years. For leaders aiming to transition their business, more than half (61%) plan to transfer it to family either through inheritance (28%), sale (26%) or as a gift (7%).
For more information on the 2022 Australia Business Leaders Outlook, visit www.jpmorgan.com/businessleadersoutlook-australia.