BUSINESS CONDITIONS BOUNCE BACK POST-ELECTION

Transcription

1 SEPTEMBER BUSINESS CONDITIONS BOUNCE BACK POST-ELECTION Executive Summary During the tember Quarter, the NSW Business Chamber s Business Conditions Survey saw a sharp rise in business conditions across the board, although most indicators still remained in negative territory. This improvement in sentiment is substantially driven by the 7 tember election result, but low interest rates are clearly beginning to kick in and the lower Australian dollar is facilitating improved conditions for exporters. Seasonal influences may also have played a role. Remaining causes for concern include the weakening labour market and the ongoing potential for negative flow through from the decline in mining and construction, but even in these industries businesses were more up-beat. Among the headline indicators overall business conditions saw an almost 20 point improvement to reach -6.6, up from the previous month. Sales revenue improved by around 10 points to improved for the second straight quarter, this time by around 7 points, but it remained weaker than overall conditions and sales at -23. Export sales also improved substantially, but remained in negative territory. While our Index that tracks business perceptions regarding the overall performance of the NSW economy reached positive territory for the first time since early. Up Down Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked By Employees Capacity Utilisation Investment in buildings, technology, plant and equipment Ease of access to finance Cost of Finance As part of our survey, the Chamber is trialling an innovative job index with the help of Bob Olivier, Director of HRO2 Research Pty Ltd, employment data analyst author of the well-known Olivier Job Index. The Index uses cutting edge technology to source ads directly from employer websites, recruiters and job boards then de-duplicates advertisements from multiple sources. The first full quarter of data shows the index moving from to from July to tember, after increasing dramatically from its starting point in May. This positive result is supported by movement in the Chamber s usual indexes for employment numbers and hours worked, which both showed substantial improvements. Businesses also indicated that wage rates have strengthened, which likely reflects the impact of the implementation of the Annual Wage Review s mandatory increase to award wages. The Chamber s index for investment also went up, while access to finance improved and cost of finance fell. Businesses expectations for the ember quarter are even more positive, with all indicators predicted to reach positive territory. SEPTEMBER Current Expected SEPTEMBER Current Expected NSW Economic Performance Business conditions Number of employees Hours worked by employees Sales revenue Capacity Utilisation Export sales Investment in buildings, technology, plant and equipment Ease of access to finance Wage rates Cost of finance Key findings Sentiment about the overall performance of the NSW economy has improved from to 4.6 this quarter with expectations for an even better performance over the next three months. improved even further from the previous quarter, moving from to -23.0, but remain entrenched in negative territory. Business conditions and sales improved considerably from the e result, with business conditions moving up to -6.6 from and sales revenue rising from to Ease of access to finance has increased this quarter to its highest levels since the survey began in April, up from to The cost of finance continues to decrease, moving to from -8.4 in e.

2 Survey Demographics NSW Business Chamber Job Index The NSW Business Chamber is trialling an innovative new Total survey respondents: 809 approach 1007 to measuring job advertisements with the help of Bob Olivier, Director of HRO2 Research Pty Ltd, employment data analyst author of the well-known Olivier Job Index. Olivier s new technique uses cutting edge technology to source ads directly from employer websites, recruiters and job boards then de-duplicates advertisements from multiple sources. This new methodology solves problems faced by existing job indexes which have overstated recent declines in the Australian employment market as businesses move their advertising away from print media and online job boards to a range of new direct sourcing strategies such as LinkedIn. The first full quarter of data shows the index moving from to from July to tember, after increasing dramatically from its starting point in May. By job type the majority of advertised positions were permanent, with temporary job ads actually declining slightly. The four industries with the largest shares of job ads were Accommodation and food services, Financial and insurance services, Health care and social assistance, and Professional, scientific and technical services. While these industries grew strongly, there were declines in Mining, Transport, postal and warehousing and Construction ads. All occupation categories grew, strongly with professionals representing by far the largest share, followed by Managers and Clerical and administrative workers. The regions where job ads grew most strongly were Western and Northern NSW, while Southern NSW was the region where job ads grew most weakly. Note that smaller sample sizes mean that data by job type, industry, occupation and region are subject to greater volatility and should be treated with caution. All Survey Enquiries Contact: Craig Milton NSWBC Policy Analyst E: craig.milton@nswbc.com.au T: (02) Please note: Graphs and tables included in this report indicate the survey results via the amount of up responses minus the amount of down responses. Since e, N/A was included as an option in some answers. This may have had a minor impact on the results featured. 2

3 Business Conditions Sales Revenue Export Sales Current 21.4% 50.6% 28.0% -6.6 Expected 44.7% 44.4% 10.9% 33.8 Current 28.5% 32.8% 38.7% Expected 52.9% 32.6% 14.5% 38.4 Current 15.8% 53.8% 30.4% Expected 21.1% 63.7% 15.2% 5.9 Wage Rates Number of Employees Current 20.0% 37.0% 43.0% Expected 43.3% 38.8% 17.9% 25.4 Current 32.5% 64.1% 3.4% 29.1 Expected 20.6% 76.3% 3.1% 17.5 Current 13.3% 69.6% 17.1% -3.8 Expected 16.6% 73.3% 10.1% 6.5 3

4 Hours worked by Employees Capacity Utilisation (or intensity in the use of your business resources) Investment in Buildings, Technology, Plant and Equipment Current 16.6% 73.3% 10.1% 6.5 Expected 26.2% 63.3% 10.5% 15.7 Current 22.3% 54.7% 23.0% -0.7 Expected 29.0% 62.7% 8.2% 20.8 Current 21.5% 51.5% 27.1% -5.6 Expected 21.1% 64.1% 14.7% 6.4 Ease of Access to Finance Cost of Finance Performance of the NSW Economy SEPT Stronger Same Weaker Index Current 8.0% 73.2% 18.8% Expected 7.3% 84.7% 8.1% -0.8 Current 14.2% 60.0% 25.8% Expected 13.1% 78.6% 8.3% 4.8 Current 28.7% 47.2% 24.1% 4.6 Expected 53.1% 36.3% 12.7%

5 Impact of Cost Increases on NSW Business Competition Survey respondents indicated that the increasing costs of electricity are still affecting many NSW businesses, with 43% of businesses experiencing a significant or very significant impact, although this has fallen slightly from 45% in e. Fuel and transport expenses are emerging as an increasing concern for businesses with almost 40% of respondents reporting a significant or very significant impact, up from 31.2% in e. Employee-related expenses and internet and phone costs remained at roughly the same level, as did rent and mortgage costs. The impact of increasing cost of raw materials and consumables rose considerably with 26.4% of businesses reporting either a significant or very significant impact. The cost of finance and gas both fell slightly with their combined significant and very significant percentage each falling between 1% and 2%. To what extent have the following cost increases impacted on the competitiveness of your business over the last 3 months (e to tember )? Answer Options Very significantly Significantly Moderately Somewhat Not At All Raw Materials / Consumables 8.3% 18.1% 29.5% 20.5% 23.6% Rent / Mortgage 4.0% 12.4% 22.8% 19.9% 40.9% Internet / Phone 3.1% 11.5% 28.2% 26.2% 31.0% Electricity 16.7% 26.3% 25.0% 17.4% 14.6% Gas 9.0% 14.6% 24.7% 13.3% 38.4% Fuel / Transport 11.9% 27.7% 25.4% 21.1% 13.9% Finance 4.1% 10.2% 24.8% 23.5% 37.4% Employee- Related Expenses 8.5% 18.4% 28.0% 26.0% 19.0% Factors affecting NSW business performance Over 580 participating businesses provided feedback regarding other factors that were affecting their business performance over the past three months. An overwhelming number of respondents indicated that the Federal election had significantly impacted their business, with many businesses reporting delaying their own spending and hesitant customers until the new Government was announced in tember. A lack of Government funding or changes to funding arrangements are increasingly having a greater impact on NSW businesses. Coupled with ongoing political uncertainty and poor legislation and government policies, it appears that NSW businesses are optimistic about the change in Federal Government following the tember election. Increasing costs, particularly in the areas of electricity, wages, superannuation and training, were also ranked as a high concern by respondents. Adverse weather conditions were less of a concern this quarter with more businesses actually reporting that favourable conditions had led to an increase in business activity. Imports, fluctuations in the volatile Australian dollar and exchange rates are also impacting on the business performance of many respondents. The top 20 most common factors affecting business performance in tember, as reported by the respondents, are: t e Factors affecting NSW Businesses % Federal Election 16.9% 2 1 Increased costs (wages, electricity, 11.7% superannuation, training) 3 5 General economic uncertainty / lack of 6.9% business activity 4 2 Lack of Consumer Confidence 6.2% 5 14 Government funding / lack of 3.8% expenditure 6 7 Poor government policies/legislation 3.6% 7 11 Political uncertainty 3.3% 7 12 Lack of business confidence 3.3% 9 6 Industry downturn (esp. Mining, 3.1% Construction) 9 8 Australian dollar / exchange rate 3.1% 11 4 Adverse weather conditions 2.4% 11 N/A Poor Labor government 2.4% 13 9 Increased competition 2.1% Red tape / regulatory compliance 2.1% issues Staffing/turnover issues 1.7% 16 N/A Closure of other local businesses 1.6% 16 N/A Imported products 1.6% Local council issues 1.6% 19 N/A Favourable weather conditions 1.4% Seasonal factors 1.4% 5

6 Skills The proportion of NSW businesses reporting skills shortage pressures has increased slightly since the e quarter, from 33.0% to 35.0% in tember. This follows a downward trend since ch, when skills shortage pressures peaked to a reported 46.8%. Since ch, the reported level of skills shortages has remained relatively stable around 35.0%. As pointed out by the former Department of Education Employment and Workplace Relations (DEEWR), skill shortages can coexist with relatively high levels of unemployment and sometimes shortages are restricted to experienced workers or those who have specialist skills. Shortages can result from a number of factors including low levels of training, high levels of wastage, changes in technology, increasing demand for new skills within an occupation and locational mismatch. Skills shortages have been reported across major industry sectors. Sectors reporting high levels of skill shortage pressures included health care and social assistance (54.4%), construction (45.2%), information media and telecommunications (43.8%) and accommodation and food services (39.2%). Occupations in shortage include sales and marketing professionals, IT professionals, chefs and other hospitality workers and a variety of allied health professionals, which reflects the aforementioned higher skills shortages reported by these particular industries. Businesses were also asked about their use of the skilled migration program. Some 14.3% of businesses employ a skilled migrant and 54.3% of those rely on the independent General Skilled Migration labour pool. Some 45.7% of respondents sponsor their skilled migrant employees. Government reforms to the skilled migration program in saw a shift in the balance of the program away from independent skilled migrants, without pre-arranged employment in Australia, towards sponsored skilled migrants with employment arranged prior to their arrival. The figures reported in these quarterly surveys, since, have reflected this policy change, with relative growth in the number of businesses reporting that they sponsor their workers. Skills in shortage Skills or Professions most in demand % 1 1 Sales, keting 10.3% 2 3 Chefs, Cooks, Wait Staff and Hospitality 6.5% 3 2 IT skills, Programming, Website development, Social media 5.7% 4 7 Allied Health professionals and General Practitioners 4.6% =5 =9 Engineers, Surveyors and Planners 4.3% =5 16 Management skills 4.3% 7 =5 Tradespeople (incl. Electricians) 4.1% 8 =21 Transport workers, logistics and removals 3.8% =9 =5 Accountants, Bookkeepers 3.5% =9 4 Auto Technicians / Mechanics 3.5% =9 20 Graphic Design, Signwriting, Printers 3.5% =9 =21 Technical Skills 3.5% Community care (Disability, Aged care, Nurses) 3.2% 14 =18 Cleaners, Security and Maintenance 3.0% =15 =9 Construction skills (drafters, architects) 2.7% =15 =18 Finance advisers/insurance brokers 2.7% =15 11 Machinery operators (incl. welders) 2.7% 18 8 Administration staff 2.4% =19 13 Fabricators/boilermakers/sheet metal workers 2.2% =19 =24 Telecommunication skills 2.2% Percentage of businesses reporting a skills shortage July - tember Businesses reporting a skills shortage e - tember Yes 35.0% No 65.0% 35.0% 6 Nick Minto, Senior Policy Adviser Employment, Education and Training NSW Business Chamber E: nick.minto@nswbc.com.au

7 Appendix I Business Conditions Survey Key Indicator Index (tember ) Note: Results depict the Business Conditions Survey Index results from April to tember. Figures are determined by calculating the percentage of respondents answering % Up minus % Down. (For example, 15.8% of respondents indicated export sales had gone up in the last quarter whereas 30.4% indicated these had gone down. The resulting indicator score for this result is thus presented as -14.6). Current Apr Jul Nov Apr Jul Nov Business conditions Sales revenue Export sales Wage rates Number of employees Hours worked by employees Capacity utilisation Up / Down Investment in buildings, technology, plant and equipment Ease of access to finance Cost of finance Expected Jul Nov Apr Jul Nov Business conditions Sales revenue Export sales Wage rates Number of employees Hours worked by employees Capacity utilisation Up / Down Investment in buildings, technology, plant and equipment Ease of access to finance Cost of finance

8 Appendix II Results by Region ALL OF NSW Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance SYDNEY REGION (COMBINED) Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance REST OF NSW (COMBINED) Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance CENTRAL COAST Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance CENTRAL WEST Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance HUNTER Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance ILLAWARRA/SOUTH COAST Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance

9 MID NORTH COAST Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance NORTH EAST SYDNEY Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance MURRAY-RIVERINA Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance NORTH WEST SYDNEY Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance NEW ENGLAND Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance SOUTH EAST SYDNEY (INCL. SYDNEY CITY) Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance NORTHERN RIVERS Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance SOUTH WEST SYDNEY Current Expected Businesses surveyed: NSW Economic Performance Business Conditions Sales Revenue Export Sales Wage Rates Number of Employees Hours Worked by Employees Capacity Utilisation Investment in BTP&E Access to Finance Cost of Finance