PERTH (miningweekly.com) – Major BHP is expecting the tight labour market to be the biggest inflationary concern for 2023, VP market analysis and economics Dr Huw McKay said on Tuesday.
“Six months ago, at the time of our full-year results for the financial year 2022, we noted that while prices in general remained close to or above forward–looking estimates of equilibria, differentiation across commodity clusters had increased. That divergence persisted in the first half of financial year 2023, with the direct and indirect impacts of the Ukraine conflict continuing to drive extraordinary volatility in energy, food and fertiliser markets.
“Non–ferrous metals and the steelmaking value chain were also impacted by former Soviet Union (FSU) supply uncertainty, but China’s dynamic zero–Covid policy and housing market weakness, and the financial market turbulence that emerged elsewhere under escalating inflation, multi–region central bank tightening and recessionary speculation were even more influential,” McKay said.
“As expected, bottlenecks in global logistics, non–energy industrial products and downstream manufacturing have eased noticeably over the last six months, in part due to genuine efficiency improvement, but this trend is also due to a marked reduction in new order flow allowing backlogs to be cleared.”
McKay said that BHP’s concerns over the operational labour markets had been justified, with worker availability tight and wage pressures continuing to come through.
“The emerging nuance in this regard is that labour supply conditions are improved from where they were 12 or even 6 months ago – but from a unit labour cost perspective, the pressure remains high,” he added.