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Skills shortages, drought continue to challenge business

Release Date: 31/10/2019
Ongoing skills shortages and the impact of drought are hindering business performance and confidence in the Hunter region, according to the NSW Business Chamber’s (NSWBC) latest Business Conditions Survey.
The September quarter survey shows some signs of stabilisation compared to previous quarters but business conditions remain challenging across the state, with relatively weak household demand constraining spending in people-serving industries such as construction, retail and food services.
“The Hunter region bounced back marginally from the subdued results in June 2019 however the improvement was not as marked as we might have anticipated following the uncertainty created by state and federal elections being held in quick succession earlier in the year,” Hunter Business Chamber CEO Bob Hawes said.
Business confidence was suppressed across the state, but the slump was less severe in the ‘Hunter’ and ‘Newcastle and Lake Macquarie’ statistical areas.
“Positive sentiment for capital investment, the continued level of activity in the construction sector and reasonable employment levels are supporting the regional economy to a greater extent than is the case elsewhere,” Mr Hawes said.
The anticipated economic stimulus from record low interest rates, a more competitive exchange rate and tax cuts were not immediately evident in the survey, although these factors may eventually boost growth.
Skills shortages continue to be an issue, with more than half of survey respondents across all industries indicating skills gaps in their workforce. The impact was more pronounced in Newcastle and Lake Macquarie than elsewhere in the state, with more than 70 per cent of businesses reporting skill shortages. In the Hunter Valley excluding Newcastle, the figure was 51.7 per cent.
Trade and vocational skills are most in demand in the Hunter Valley, while the biggest shortage in Newcastle and Lake Macquarie is in IT skills.
“Businesses in the region are becoming quite pessimistic in response to the question ‘Do you have suitably skilled staff?’” Mr Hawes said,
“The Chamber is working with the NSWBC to redouble efforts to make sure shortcomings in training and education are addressed.”
The persistence of drought conditions continues to affect regional NSW, with all industries affected. Not surprisingly, the most seriously drought-affected areas, the Far West and New England areas, recorded the lowest results.
The Hunter and NSW Business Chambers are calling on governments to implement a range of drought-relief measures, including expediting promised infrastructure spending in the regions to give local economies a much-needed boost.
Energy costs also continue to be a significant financial drain on many businesses, with elevated electricity and gas bills continuing to squeeze margins and reducing capacity to invest in capital and other resources to increase productivity and output.
“The importance of the energy equation of availability, reliability and affordability cannot be overstated when it comes to sustaining business and industry and the jobs they provide in the Hunter,” Mr Hawes said.
“The survey again shows these issues need more attention, despite initiatives being taken by governments to facilitate improvements in the sector.”

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