SA Consumer and business confidence dips following interest rate hold, global economic uncertainty
Consumer and business confidence in South Australia has dipped in July in response to interest rates being kept on hold and continuing global economic uncertainty.
BankSA’s latest State Monitor survey, undertaken from 9-16 July 2025, showed consumer confidence decreased 3.6 points since March 2025 to 106.3 points. Business confidence decreased by 1.4 points to 116.8 points.
Both measures remain well above the 100-point benchmark, indicating consumers and businesses remain more optimistic than pessimistic overall.
Decreased consumer confidence was driven by spending, with consumers indicating they were less likely to have made a major purchase in the past three months (down 9 per cent) or were less likely to be planning a major purchase in the next three months (down 8 per cent). However, they were more optimistic that the climate for consumer spending would improve in the next 12 months (up 1 per cent).
South Australian businesses expressed concern about the general direction of small business (down 13 per cent) and were less confident that there would be a significant improvement in the performance of their business in the next 12 months (down 9 per cent). Businesses were more confident they would make a major purchase in the next 12 months (up 9 per cent) and indicated they had created additional employment over the past three months (up 7 per cent).
BankSA General Manager Business, David Firth, said the dip in consumer and business confidence was unsurprising, noting the survey was undertaken directly after the Reserve Bank’s decision to leave interest rates on hold, but that the South Australian economy continued to outperform other states in key areas such as housing price growth and construction activity.
“There is a solid level of confidence in the South Australian economy with the State currently leading the nation on jobs growth, housing price growth and construction starts,” Mr Firth said.
“Both consumers and businesses remain more optimistic than pessimistic overall, and our key indicators are also less volatile than in previous surveys, indicating a cautious but steady response from respondents,” Mr Firth said.
“For consumers, there was likely some disappointment at interest rates remaining on hold and households are continuing to do it tough due to cost-of-living pressures, but the survey showed there is an expectation that things will be better in 12 months as anticipated interest rate cuts free up spending capacity and reduce strain on household budgets.”
“For businesses, there was some negativity regarding above-inflation increases in wages that will be difficult to pass on in a climate of lower consumer demand and there is continuing uncertainty around global economic conditions and potential impact of US tariffs. However, businesses are more positive about the future in terms of making a major purchase and creating additional employment.
“There was also a growing divide between small and big business, with smaller businesses more pessimistic than optimistic overall, while bigger businesses remain significantly more confident.”
Additional factors impacting consumer confidence included the current state of world affairs, cost of energy for homes, and wages relative to the cost of living. Businesses were similarly impacted by world affairs and cost of energy, as well as the availability of property to buy or rent.
Other key findings from the report include:
All age groups other than 50-64 recorded a decrease in consumer confidence with those aged 25-34 recording the biggest decrease in confidence (down 7 points), likely reflecting the hold in interest rates.
Blue collar workers recorded an increase in consumer confidence (up 6 points) whereas white collar workers confidence decreased by 4.6 points.
Businesses with less than $0.5 million turnover recorded a significant decrease in confidence (down 16.2 points) whereas those with between $0.5 million and $1 million in turnover recorded an increase (2.6 points).
Confidence in the finance and construction sectors increased significantly (up 26.0 and 20.1 points respectively) but there was a decrease in the transport sector (down 32.9 points).
Regional confidence
Similar to the statewide results, both consumer and business confidence in South Australia’s rural regions recorded a small decrease.
Consumer confidence decreased by 0.4 points to 97.2 points and remaining below the 100-point benchmark, which indicates more people are pessimistic than optimistic overall. Business confidence decreased by 3.1 points to 98 points, also now sitting below the 100-point benchmark.
“Consumer and business confidence among rural South Australians remains subdued and below that of their metropolitan counterparts. Drought conditions continued to impact crops and livestock and South Australia’s algal boom is starting to impact coastal regions, particularly the aquaculture and tourism sectors,” Mr Firth said.
This survey was conducted between 9-16 July 2025. The State Monitor is unique as the only survey that measures just South Australian consumer and business confidence. The independent survey is based on a statewide phone survey of 300 consumers and 300 small business owners and managers, representative of the population and business community, conducted by the Action Market Research. It is the 86th monitor in a series that has tracked consumer and business confidence in South Australia since 1997.
A baseline of 100 points is used to which the overall survey results are either added or deducted. A result greater than 100 represents a positive result and therefore more optimistic respondents than pessimistic, while a result less than 100 represents a negative result meaning there are more pessimistic respondents than optimistic. The maximum margin of error when generalising the results from the sample surveyed to the population is +/-6% at a 95% confidence level.
