Labour Shortages Limiting Business Growth in Townsville

The PVW Partners’ September 2023 quarterly Business Confidence survey shows that business confidence remains positive with a small increase in the overall level of confidence. The September 2023 quarter resulted in an index of 1.7, a 0.4 point increase from the previous quarter.

 Carl Valentine, PVW Partners Managing Partner said, “It’s reassuring to see business confidence remain positive and climb slightly. This survey has allowed us to capture additional data to help understand why confidence levels in 2023 have declined compared to those recorded throughout 2021 and 2022”.

Commencing in September 1991, PVW Partners Townsville Business Confidence Survey has now been running for over 30 years and is a unique measure of the levels of confidence of Townsville’s business community.

Carl Valentine observed “the overall results this quarter were fairly similar to those recorded in the June 2023 quarter however when comparing larger and smaller businesses (based on turnover greater or less than $10 million) there was a marked reduction in larger business confidence while smaller business confidence remained relatively steady. Larger business respondents in particular indicated they expected to run at higher levels of operating capacity and yet 38% plan on reducing their capital expenditure”.

“Growth in employment remains relatively muted with only 16% of respondents expecting to employ more people in the next quarter, this is only half the average recorded for employment growth throughout 2021 and 2022.”

Over the past year responses to our quarterly surveys have indicated the following trends:

• sustained positive levels of business confidence, but with the level of positivity declining;
• fewer businesses looking to expand their workforce (with more looking to maintain their existing number of employees);
• more businesses indicating they plan to reduce their levels of capital expenditure; and
• growing levels of spare productive capacity in businesses. 

Carl Valentine commented “these trends seemed to be running counter to what has generally been considered a relatively good business climate for Townsville businesses and we posed a few questions to help us better understand the future plans for our businesses and what, if any, impediments to growth are being experienced.”

“Responses to the first of our special questions indicated that around 36% of our businesses are actively growing their businesses and have to date been able to find solutions to the impediments that would otherwise constrain that growth. However, a further 45% indicated they were working on maintaining and not growing their businesses due to concerns around the future economic climate (18%), apparently insurmountable growth impediments (16%) or a sense that it was time to prepare for harder economic times ahead (11%). Only 5% of respondents indicated they were looking to reduce the size and scale of their businesses”

The second special question this quarter was targeted at those looking to consolidating operations (maintaining current business operations) due to impediments to growth and explored what they saw as being the key impediment(s) to growth being experienced.

Carl Valentine said “in a result that won’t be a surprise to many, almost 41% of respondents indicated the key impediment to growth was the availability of appropriately skilled workers in the local labour market. Further responses in relation to employees noted that others could find employees outside Townsville but they weren’t able to entice them to relocate to Townsville for available roles (12%). Of special interest in the discussion around availability of housing in Townsville for new employees, only a little over 3% of respondents cited that as an impediment to their business growth”.

“Other significant business growth impediments were the cost of expansion, including wage costs (12%), suitable financing options, including consideration of the affordability of finance (10%) and limitations on other resources needed for growth (7%).

Carl Valentine concluded that “every stage of the economic cycle represents challenges to our business owners and managers. While the current cycle still presents opportunities for our businesses, labour constraints continue to be a significant barrier to business growth in our region

Over the past 12 months responses to our survey have indicated the following trends:

• sustained positive levels of business confidence, but with the level of positivity declining;
• fewer businesses looking to expand their workforce (with more looking to maintain their existing number of employees);
• more businesses indicating they plan to reduce their levels of capital expenditure; and
• growing levels of spare productive capacity in businesses.

We would like to better understand these trends and some of the reasons behind them.

1. In general terms and with the above comments in mind around recent survey data, which of the following best describes the current position of your business.

2. Where you are consolidating operations (maintaining current business operations) due to impediments to growth, what is the key impediment to growth you are facing?