Business output shrinks for second month

Poppy Johnston | November 23, 2022

Business activity shrunk for the second month in a row as worsening economic conditions dry up new orders.

Australian private sector output contracted faster in November after softening more moderately in October, the S&P Global’s flash Purchasing Managers’ Index revealed.

The composite index, which includes survey results from both manufacturing and services firms, fell to 47.7, a 10-month low.

A reading below 50 indicates an overall decrease in activity from the month before.

The slowdown was concentrated in the services sector as demand continued to drop off.

“Worsening economic conditions amid the tightening of monetary policy weighed on new business according to survey panellists,” the S&P Global report said.

But in manufacturing, conditions picked up for the 30th month in a row.

The latest improvement, however, was the weakest since June 2020.

Businesses of all stripes were still trying to rebuild their workforces to pre-COVID-19 levels with employment levels expanding strongly. 

But finding workers in the competitive labour market remained challenging, survey respondents reported.

Economic challenges are far from over, with the Organisation for Economic Co-operation and Development (OECD) labelling the energy crisis the biggest since the 1970s.

“High and persistent inflation has led to brutal application of monetary policy by the world’s central banks and that’s having an impact on the prospects for global growth as well,” Treasurer Jim Chalmers told parliament.

While Australia’s economy is considered more resilient than other nations, the OECD expects real GDP growth of four per cent in 2022.

The United Nations body is then forecasting real GDP to grow by 1.9 per cent in 2023 before sinking to 1.6 per cent in 2024.

Dr Chalmers said his government was committed to lifting wages to support workers through cost of living pressures.

“The pressures on our economy are coming at us from around the world and they are felt most acutely around the kitchen table,” he said.

The government has been seeking to pass the workplace reforms before Christmas it says will improve the bargaining position of workers to demand higher pay. 

New Australia Institute research has also revealed the extent of unpaid overtime, with Australian workers missing out on six weeks of unpaid overtime a year.

This amounts to more than $92 billion in lost pay, equivalent to 2.5 billion hours, or about $8000 a year per worker.

“This is time theft,” Australia Institute research economist Eliza Littleton said.

“The prevalence of overtime suggests that ‘availability creep’ has eroded the boundaries between work and life.”

Examples of unpaid overtime include checking emails on the weekend, taking multiple-time-zone calls out of hours and teleconferencing from the dining table, along with unspoken employer expectations that workers attend to work issues on their own time.

The report showed 84 per cent of workers surveyed wanted the “right to disconnect” from work.