South Australia’s economy is beginning to bloom. Despite the arrival of winter, our state is experiencing a new economic springtime buoyed by a change in government, an uneventful summer on the electricity front and improvements to our trade bottom line.

Yet our economic roots need some more time to take a firm hold, as the Business SA – Statewide Super March quarter Survey of Business Expectations shows.

Confidence in South Australia is finally in positive territory, returning to levels not seen for years. With a maximum score of 200, our confidence index hit 115 this quarter, up 16.6 points compared to December 2017. The last time local confidence hit such a peak was in March 2010.

Underlying concerns about profitability and labour costs do exist though. For close to a third of businesses who took part in our survey, profitability was down, and only 26 per cent recorded an improvement.

While labour costs were stable for 68 per cent of businesses, they increased for 28 per cent. That’s where our roots not only need to take hold, but our economic stabilisers such as expenses and labour costs need to firm up and stay put.

Our businesses are putting those economic concerns and rising costs to the side though, and looking at the bigger picture of a state undergoing political change. They’re being overtly positive.

General business conditions were lower than expected for the quarter, but they were up compared to last March. In other words, even though conditions were better than they have been for a long time, our businesses thought conditions should be even more positive than they were.

Sales and revenue were up for close to 40 per cent of businesses, offset by the cost of materials – up for 46 per cent of respondents – and overheads were up for almost two thirds of businesses. Export sales were stable for 78 per cent of businesses, showing SA businesses standing strong in international markets.

Like a sunflower turning towards the sun – as it would in an economic spring – forecast confidence in SA’s economy over the next 12 months is also up – with 50 per cent of respondents expecting it to perform stronger, compared to 32 per cent last quarter and 18 per cent in September last year.

While almost 80 per cent expect profitability to stay the same or improve, 97 per cent expect the cost of overheads to remain the same or increase.

Many small to medium-sized businesses are suppliers to larger businesses, so if the big end of town is going well, the smaller end generally is too. It’s no surprise that 70 per cent of businesses support corporate tax cuts, with only 14 per cent opposing.

The March quarter has shown great signs of business growth. But it’s time for the figures to support the mood, and for costs to come down to ensure our business community remains strong in the face of ongoing and future challenges.

Anthony Penney is Business SA’s executive director of industry and government engagement.

This article was originally published in the Advertiser's South Australian Business Jorunal on Tuesday 5 June 2018.