Aussie business leaders optimistic about growth despite rising costs

Robert Bedwell, Chief Executive Officer of ANZ at J.P. Morgan

The majority of Aussie midsize business leaders are grappling with rising costs and challenges driven by inflation (71%). 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.

What were the research insights of J.P Morgan’s survey?

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 United States (65%), United Kingdom (69%), India (61%), Germany (59%) and France (53%).

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%) are passing up to one-quarter of their increased costs onto consumers—with 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%) of respondents say they have gotten better. To counteract ongoing supply chain challenges, Australian 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%) of the survey respondents 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, business leaders are focusing on corporate responsibility factors, citing social (57%) and environmental (51%) factors, and diversity, equity and inclusion (57%) as most important to their strategies—up 14%, 14% and 16% respectively from 2022.

Top outcomes of these corporate responsibility are rooted in improving employee retention (52%) and building company culture (50%), up 4% and 11% respectively from 2022.

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. Seven in ten (72%) are expecting transfers to take place within the next two years.

What is J.P Morgan’s take on the research findings?

“Business leaders continue to demonstrate their resilience as they skillfully manage various geopolitical and economic obstacles. 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,” said Annabelle Mooney, Head of Commercial Banking, ANZ, J.P. Morgan.

“As we continue to withstand an evolving economic environment, Aussie 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, CEO for ANZ at J.P. Morgan.