Production faces major challenges | PerthNow

Australian manufacturers are facing the most challenging times in 50 years due to supply headwinds and rising costs, but are benefiting from increasing demand, a new study finds.

The latest industry trends survey from the Australian Chamber of Commerce and Industry and Westpac showed that business conditions are expanding and gaining momentum in the June quarter.

“(But) the economy is facing capacity constraints in a tight labor market,” Westpac senior economist Andrew Hanlan told reporters in Canberra on Tuesday.

“The economy needs to ramp up investment to increase capacity and increase productivity to deliver a sustainable recovery.”

The survey’s actual composite index – a gauge of business conditions – rose to 64.5 in the June quarter, up from 56.7 three months earlier and about 51 in the second half of 2021 amid COVID-19 Delta lockdowns .

A result above 50 indicates that the industry is growing.

The expected mix was 67.5, indicating that respondents expect new orders and output to rise at a healthy clip in the September quarter.

But there was a clear message in the survey that “consumers should brace themselves for further sharp price increases”.

ACCI chief executive Andrew McKellar said one of the key new challenges facing the Australian economy is the specter of rising costs, mounting pressure on prices and inflation.

“The unit costs for manufacturers are now escalating quite a bit. They can pass on some of that through higher sales prices, but not all of it,” McKellar told reporters.

He said there are also the first signs of upward pressure on wages, as the difficulty of finding workers has increased over the past three months.

“This is at the most challenging level in nearly 50 years,” he said.

He said that with inflation projected to be seven percent by the end of the year and a global economic slowdown threatening to hamper Australia’s economic recovery, it is imperative that energy, labor and material barriers are overcome to ensure the sustainable recovery of Australia. to ensure the industry.