Business operators in the region are alarmed by rising interest rates and energy costs, the latest Business Conditions Survey revealed.

The report, undertaken by Business NSW in collaboration with Business Hunter, indicated a worrying trend for locals.

Despite relatively buoyant trading conditions, 39% of Hunter enterprises gave a score of 10 out of 10, noting they were “extremely concerned” for the impact of rising interest rates on their expansion plans.

That anxiety is set to intensify after the Reserve Bank of Australia’s (RBA) decision last week to lift the mark to a 10-year high.

Business Hunter CEO Bob Hawes said businesses were more downbeat about their economic outlook than present conditions.

“We’re seeing that many of the indicators around the economy are weighing on the minds of business owners, despite some of the sectors in the region trading well,” he explained.

“Staffing shortages, supply chain issues, geopolitical factors, energy prices and interest rates are major contributing factors.”

The business confidence index for the Hunter, which ranges from a maximum “positive” score of 100 to a maximum “negative” score of -100 softened from July to November.

But, it is expected to fall by another 10 % in the next quarter to -72.5 from -66.2 currently.

The most recent ABS Labour force data provides additional context, with unemployment rates remaining low and businesses persevering with chronic worker shortages.

It showed the monthly unemployment rate in the Hunter Valley dropped to 2.8%, down from 3.2 in September, while Newcastle and Lake Macquarie eased to 3.6%, representing a pool of about 12,000 people across the region at a time when the internet vacancy jobs list is still over 7,180 based on the National Skills Commission statistics for October 2022.

“While the monthly figures are volatile, the overall message here is that the pool of workers is low, particularly in context of the number of jobs open,” Mr Hawes said.

“It’s also important to note that many businesses have given up listing job vacancies online.

“And, the end of the year holiday period is traditionally a time when businesses take their foot off the recruitment pedal, therefore the real job vacancy rate is likely much higher than the figure expressed by the National Skills Commission.”

Labour force statistics data also shows there remains a shadow in relation to the workforce participation rate in the Hunter Valley, which still lags the pre-pandemic rate of about 65% compared to 59% now.

This represents a drop of around 7,000 in the size of the region’s workforce.

“This is remarkable and concerning given widespread reports of our population having increased over the past two years, the low unemployment rate and jobs bonanza in the Hunter Valley,” Mr Hawes said.

“For comparison, the participation rate across Newcastle and Lake Macquarie has recovered to its pre-pandemic level.”

A significant bright point is that youth unemployment (15 – 24-year-olds) remains well below pre-pandemic levels, at around 8% across the entire region compared to the figures of above 10% pre-pandemic.

“There’s great opportunity in the job market currently for young people looking for work, including for school and higher education leavers entering the job market over the next few months,” Mr Hawes said.

Business Hunter continues to assert policy makers need to bear in mind the Hunter Valley stands out in the nation by virtue of the ambitious growth spotlight it has in several sectors led by the new energy economy.

The region needs to maintain jobs growth not only for the “business as usual” case but also provide for the growth potential in new and existing sectors, which could be a factor of two times more than what our growth has been historically, according to Mr Hawes.

“We continue to work with a whole range of regional stakeholders to make sure businesses, educators and training and development organisations are all aware of the circumstances and remedies being suggested and proposed,” he said. 

“We’re also looking for initiatives that make sense to take to government particularly in the lead up to the state election in March 2023 where whoever takes government will have their hands full to be part of the solution to resolving the workforce issues currently before us.”

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