Confidence wanes in rural SA

Since July, consumer confidence is down 6.8 points, from 98.9 to 91.3, while business confidence is down to 102.3 from 108.3.

The fall in the consumer confidence index has been attributed to increased concern about job security and reduced optimism that the climate for consumer spending will improve during the next 12 months.

Regional consumers also reported a reduced intention to make a major purchase in the next three months.

For regional business owners and managers, lower confidence levels are attributed to increased pessimism that the climate for doing business will improve across the next 12 months, and lower intentions to make a major purchase in the next three months, such as plant and equipment, company cars and commercial real estate.

Regional businesses also indicated doubt there will be any significant improvement in the performance of their own businesses.

While seasonal factors played a part in confidence agriculture, alongside recreational - the only industry to report an increase in business confidence, was among the two most confident sectors in the state.

BankSA chief executive Nick Reade said falls in both consumer and business confidence in regional SA reflected wider trends.

"Australia's economic growth rate is at its slowest rate since the global financial crisis, and unfortunately, the South Australian economy is not immune to national pressures," he said.

"There is growing pessimism about the general climate for consumer spending, which is being fuelled by a lack of wages growth and rising household costs, including petrol prices, power bills and council rates.

"This uncertainty in homes is resulting in more people 'sitting tight' for the time-being, which is evidenced by planned spending restraint in households in coming months."

Mr Reade said recent tax and interest rate cuts appeared to have been outweighed by consumer concerns about the economy and their own financial positions and employment prospects.

"This is consistent with our own research that has previously shown the prevailing mood of both consumers and businesses in response to economic stimulus, such as interest rate cuts, was to reduce debt and build savings, rather than to spend or borrow more," he said.

"Businesses in the regions are also under pressure, although confidence levels still remain in positive territory, according to the State Monitor index, which is encouraging.

"It's particularly encouraging that many South Australian business owners do intend to create additional employment in the coming months for the second consecutive survey, despite reporting less confidence about the climate for doing business over the next 12 months on the back of the local, national and global economic outlook."

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The Mid North and Riverland region, which also includes the Barossa and Yorke Peninsula, reported a third consecutive fall in consumer confidence, down 1.5 points, from 92.0 to 90.5.

The region also reported a 9.7-point fall in business confidence, down from 103.8 to 94.1.

The Mid North and Riverland region remain the least confident rural region in SA for both consumers and businesses.

West and North, which includes the Upper Spencer Gulf, Far North and Eyre Peninsula, experienced a decrease in consumer confidence - down 3.6 points from 94.9 to 91.3.

This is the fourth consecutive survey with lower consumer results.

While business confidence was also down, from 106.3 to 104.4, it was the sixth survey in a row with business confidence above the 100-point baseline.

The South Coast, South East, Hills and Murray Plains had the largest fall of consumer confidence in the survey, down 14.8 points to 93.6, with business confidence down from 112.1 to 109. Despite this, it but remained the most confident rural region across both measurements.

Some other factors contributing to consumer pessimism were petrol prices, unemployment levels, wage levels compared to cost of living and political leadership.

Businesses were also hit by petrol prices, as well as the future of the Murray-Darling Basin and world affairs.