Business confidence still high

WESTERN Australian businesses remain the most optimistic in the country, particularly those in the resources sector, despite a fall-off after recent market volatility. The Hudson Report Employment Expectations survey for July to September 2006 indicates WA leads the rest of the country in terms of employer sentiment, with 50.7 per cent expecting to increase permanent employment levels in the quarter. The result, while down 5.6 percentage points on the previous quarter, is the second highest on record and is considerably higher than the 37.7 per cent employer sentiment recorded for the January to March 2006 quarter. The report found the highest level of sentiment in WA in the professional services and construction/property/engineering sectors with a net effect of 66.2 per cent. While being 1 percentage point lower than the previous quarter, the figure is still 13 percentage points higher than 12 months ago. The strong property market also contributed to the high level of employer sentiment in the state, with the report highlighting a fall in the number of days to sell to 18 for the March quarter, compared with 48 days a year ago. The government sector proved more optimistic for the July to September 2006 quarter, compared with other sectors, with a 3.4 percentage point climb to a net positive 38.7 per cent. The report says the growth is expected to be fuelled over the coming months by infrastructure investment and the implementation of a shared delivery model. Hudson Australia/New Zealand CEO Anne Hatton said WA and Queensland continued to lead employer sentiment as mining and energy companies develop billions of dollars worth of projects to feed soaring global demand. “However, volatility in commodity prices and rising project and operating costs has recently impacted sentiment slightly,” she said. Nationally, 37.4 per cent expected to increase permanent employment levels, while 6.5 per cent expected to reduce staffing levels, returning a net effect of 30.8 per cent – a 0.2 percentage point improvement on the April to June 2006 quarter. Queensland recorded a record high of 44.8 per cent, with 49.9 per cent of Queensland employers saying they would increase staffing levels, while 5.1 per cent planned to reduce permanent employment levels. Victoria recorded its highest employment sentiment since October – December 2005, with a net effect of 30.6 per cent, a 4.6 percentage point improvement on the previous quarter. Mrs Hutton said there was gradual improvement in national employer sentiment amid an extremely tight labour market, with the unemployment rate at its lowest in almost three decades. “However, the resulting upward pressure on wages, combined with higher oil prices, is linked to fear of inflation in the broader economy,” she said. “Attracting and retaining staff continues to be top of mind for Australian businesses. Now more than ever, employers need to ensure they have a well-defined and well-communicated employment value proposition. “A strong employer brand can translate into significant competitive advantage.” According to the report, industry groups including IT, professional services, construction/property/ engineering and telecommunications were the most bullish in terms of expressing positive sentiment in excess of last quarter. Of the professional services companies surveyed, 48.8 per cent said they planned to increase their staff, while 3.5 per cent said they planned to reduce staff levels, resulting in a net 45.3 per cent. IT led the industry sectors, returning a net effect of 45.4 per cent. “Organisations are making significant investments in technology to drive improvements in business processes and that driving demand for highly skilled workers,” Hutton said. The telecommunications sector rebounded, with 37.9 per cent employer sentiment, up 15.9 percentage points on the April to June 2006 quarter. The report said the growing demand for services, coupled with increasing competition, has created employment opportunities in most sub-sectors of the telecommunications industry.

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