No. 3 - Department of Treasury - The Western Australian Government

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Western Australian Economic Summary2006 No.3Business SurveysBoth the Access Economics Business Outlook and Western AustralianChamber of Commerce and Industry (CCI) Economic Compass for theSeptember 2006 quarter have forecast employment growth to continue in thenear term in Western Australia.The September 2006 quarter CCI - Bankwest Survey of WA BusinessExpectations reported that 70% of businesses surveyed said labour was“scarce” during the quarter, up from compared to 63% a year previously butdown marginally from its 71% peak in the previous quarter (Figure 20).CCI reports that labour shortages are most acute among larger firms andthose in the production sector, where around 80 per cent of respondentsindicated that labour was scarce. Labour shortages were expected tocontinue into the December quarter.80%70%60%50%40%30%20%10%0%Figure 20BUSINESSES REPORTING LABOUR 'SCARCE'WA, % Respondents, CCI-BankWest Survey1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Source: CCI/BankWest Survey of Business Expectations1 Compiled by the Department of Employment and Workplace Relations (DEWR)32 Department of Treasury and Finance
2006 No.3 Western Australian Economic SummaryBusiness ConditionsBusiness conditions have been very positive in Western Australia over thepast year. This has been particularly so in mining, the State’s largestindustry, which is currently enjoying high world prices for resourcecommodities. Construction activity has also been strong, with residentialbuilding from the State’s housing boom and resource-related engineeringprojects pushing the sector towards full capacity.The strong conditions for the State’s resource industry have led to asubstantial increase in business investment, which increased in volume by37% over 2005-06, and 139% in the past five years. Capacity utilisation rateshave risen despite this strong investment. 1However, not all sectors of the economy have grown as strongly as theresources and construction sectors. Furthermore, the strengths of activity inthese sectors has led to labour shortages and wage pressures (see LabourMarket chapter), rising materials costs and construction delays. Mostbusinesses continue to report increasing costs, particularly for skilled labour,fuel and materials.Business SurveysBusiness surveys report mixed responses from businesses on economic andtrading conditions.The September quarter 2006 CCI-BankWest Survey of WA Business 2 foundthat, of the core indicators used in the survey, only the export sales indeximproved during the quarter. However, this comes after a sharp increase inturnover, profits and trading conditions during the June quarter. Conditionswere still strong by historical standards, with trading conditions inparticular at near-record highs (Figure 21).1 CCI-BankWest Survey of WA Business and NAB Quarterly Business Survey, bothfor the September quarter 2006.2 The CCI-BankWest Survey of WA Business is a quarterly State-based survey whichmeasures the confidence of Western Australian businesses, covering all sizes andsectors across the State. The views of 399 firms were canvassed for theSeptember quarter 2006 survey. The survey measures the confidence of businessesin both the National and State economies. Businesses are also surveyed on theiroutlook for general business conditions, the labour force and operating conditions.The figures reported in the survey are not seasonally adjusted and some care needsto be taken in interpreting the results. The index calculations used give weight to the‘extent’ to which an indicator is rising or falling (i.e. a response indicating thatemployment this quarter is “much less” than last quarter is given a higher weight thanone saying it is “less”).Department of Treasury and Finance 33
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No. 3 - Department of Treasury - The Western Australian Government

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