Fears lack of labour will stifle economic boomtime

Australian manufacturers are looking forward to a burst of ­activity in the New Year, with business confidence reaching its highest level since 1994.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar.

Australian manufacturers are looking forward to a burst of ­activity in the New Year, with business confidence reaching its highest level since 1994 even as firms worry that difficulty finding labour and sourcing key materials will constrain a much-needed ­rebound.

The latest ACCI-Westpac ­survey of industrial trends – a ­survey that has been running since 1966 – showed a record 71 per cent of manufacturers expected an increase in new orders after the east coast Delta lockdowns stalled activity.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said “with our vaccination rates reaching ­almost 90 per cent across the country, the survey indicates that manufacturers are encouraged they won’t see a return to­ ­extended and widespread lockdowns”.

“It’s critical that now we have reopened, we stay open; the manufacturing sector cannot afford to return to lockdowns and restrictions,” Mr McKellar said.

New figures from the National Skills Commission released on Monday showed recruiting ­activity held at 13-year highs in November.

Employers placed more than 252,000 job ads online in the month, the data showed, up 50 per cent on pre-pandemic levels. The slight lift in recruiting ­activity in November came despite a decline in NSW, after employers had embarked on a hiring spree in October ahead of the easing of lockdowns.

The latest ACCI-Westpac survey showed 16 per cent of respondents cited trouble sourcing materials as the factor most limiting production – the highest level since the oil shock of 1973 – and 14 per cent cited labour as the factor most limiting production, the highest proportion since 2008.

Mr McKellar said the sector would not be able to “realise its potential with material and­ ­labour constraints limiting ­production”. With worries about supply constraints, the most intense since the oil shock of the 1970s, he said “resolving these shortages will be critical for the industry’s recovery”.

The hopes for a stellar start to 2022 for Australian businesses were given a further boost after Health Minister Greg Hunt on Monday confirmed the inter­national border would reopen as planned on Wednesday, despite a looming Omicron Covid-19 threat that triggered a two-week delay.

 

As the two major parties sharpen campaign lines ahead of next year’s election, Anthony ­Albanese on Monday said migration played “an important role in our economy” but “we’ve ­become too reliant upon temporary migration rather than training Australians up for the jobs that are available”.

The easing of border restrictions in Queensland, Tasmania and the Northern Territory this week, and the flagged removal of travel bans to Western Australia, would also help lift labour ­mobility between states and territories, Mr McKellar said.

Josh Frydenberg on Monday morning said he was “very hopeful that state premiers will stick to the plan, keep their borders open, and allow Australians to be reunited at Christmas and allow businesses to flourish”.

The Westpac-ACCI survey showed manufacturers were passing on only a portion of higher input costs to consumers, putting pressure on profit margins.

A fifth of surveyed firms ­expected to raise selling prices in the next three months as demand ratcheted up.

Westpac senior economist Andrew Hanlan said the economy was “set for a strong recovery in 2022, supported by substantial policy stimulus”.

“Pent-up household demand, an uptrend in home building ­activity, a lift in business equipment spending and a wave of public works projects will boost orders for manufacturers,” he said.