Business New Zealand chief executive Phil O'Reilly said last week's Performance of Manufacturing Index which showed the sector expanding for the first time since April last year, indicated the productive sector was climbing out of recession.
He would be monitoring the export-heavy economies of Otago-Southland and Canterbury-Westland in coming months for those positive trends to continue, but he said in Dunedin yesterday that he expected the unemployment rate to drop quickly once the economy recovered.
When it did, the issues of innovation and workplace skills would once again be significant productivity barriers.
"It will become an issue soon.
"I predict that in two years' time, skills shortage will again be the number one issue facing business," Mr O'Reilly said.
Unemployment would not be a problem, because Government agencies were better than many of their counterparts in getting unemployed into work, the small size of businesses meant many relied on staff rather than expensive machinery to perform tasks and New Zealand had a low birthrate.
On the Government's four other pillars for economic growth, Mr O'Reilly questioned if there was the appetite to change the tax system but he was positive about its efforts to reform regulation, the public service, and investment in infrastructure.
Reform did not immediately translate to ease of doing business.
"If you change the Resource Management Act today, the impact on investment would be five years away."
Mr O'Reilly was worried the economic recovery would be overtaken by domestic activity, not the export sector, saying exporters were concerned the United States and Europe, weighed down by debt and, in the case of Europe, inflexible labour laws, continued to perform poorly.
He was urging companies to look to Asia for new business.
