CONFIDENCE among regional business owners in SA has strengthened in recent months but has dropped substantially in rural consumers, according to BankSA's state monitor.
The latest BankSA State Monitor shows statewide regional business confidence is up 4.1 points since the last survey - held in October - rising from 107.9 points to 112.0.
The jump in regional business confidence has been attributed a more positive outlook that business operations will improve in the coming year, combined with reduced concern about a possible downturn in turnover.
More regional businesses also reported putting on more staff since October, but they are more cautious about creating additional employment over the next three months.
Despite optimism among rural businesses, consumer confidence across regional SA has fallen 14.2 points since the October survey, from 109.9 points down to 95.7.
This was attributed to increased concern among country consumers about their own financial position over the next 12 months.
Rural consumers have also pulled back on major purchases since October - including real estate, cars, whitegoods and holiday travel - and report an overall lower intention to make a major purchase in the coming three months too.
The Mid North and Riverland region, which also includes the Barossa and Yorke Peninsula, reported falls in both business and consumer confidence in the latest survey - the only region in the state to do so.
BankSA chief executive Nick Reade said while increased business confidence overall was positive news, the large decrease in consumer confidence is concerning.
"Business and consumer confidence in regional SA enjoyed an upward trend in 2018, and while sentiment continues to trend in the right direction for businesses so far in 2019, the large fall in regional consumer confidence is worrying," he said.
"Our regions have experienced lower rainfall and as a result, lower crop yields, and while sheep and wool prices have remained solid, the dry conditions have brought challenges around the cost of feed for livestock.
"These seasonal factors, in addition to ongoing cost-of-living pressure on household budgets, are likely starting to impact disposable income and household sentiment in relation to spending.
"The challenge is to translate business confidence into greater investment and more employment for these communities, which will in turn support a much-needed boost in consumer confidence.
"We have seen some positive announcements demonstrating confidence and investment in regional South Australia in recent months, but we need to continue to grow and regenerate regional communities through targeted measures such as increased population, to ensure businesses can proceed with confidence."