The high cost of doing business, weak local conditions and finding staff have been identified as the key issues facing WA business this year, a survey has found.
The Commonwealth Bank - CCIWA survey of business expectations found businesses rated wage costs as the biggest concern with more than 40 per cent of firms reporting wage and staffing costs had increased.
CCIWA chief economist John Nicolaou said input costs (material and energy costs) also rated as a key pressure on business, with more than half of respondents reporting an increase in input costs and nearly all businesses (96 per cent) expecting them to remain elevated or move higher.
"Domestic economic conditions are also high on the agenda for businesses, a further sign that operating conditions remain tough," he said.
More than eight out of 10 firms reported flat or falling profitability, a figure which had remained static for almost 18 months.
"Nearly half of respondents reported labour to be 'scarce' this quarter, with regional operators and medium-sized firms having the most trouble sourcing staff," Mr Nicolaou said.
Despite a squeeze in profits, businesses were not passing on these higher costs to their customers.
Only 30 per cent of respondents raised their prices this quarter (the lowest level in 18 months).
However, a growing number of businesses say this can't continue much longer with 31 per cent looking to raise prices in the next three months, compared to 7 per cent that expect to cut prices.
While business overall is more positive about the short term environment than previously (20 per cent compared with 16 per cent last quarter), more businesses believe the economy will perform poorly over the next three months (24 per cent).
Mr Nicolaou said rising business costs were having the biggest impact on business and this would require urgent action from the government.
Commonwealth Bank corporate financial services general manager for WA, Greg Caust, said that the latest survey findings were consistent with feedback received from businesses across the State.
"Finding skilled labour is a major issue for businesses in WA and has been for some time now," he said.
"In a fiercely competitive environment, businesses are becoming more innovative when it comes to attracting talent. This includes providing greater flexibility and enhancing the culture within the workplace."