The positive outlook for the construction and manufacturing sector has led to “multi-year highs” in overall business confidence, says economist Stephen Koukoulas.
Credit information bureau illion’s Q1 2018 Australian Business Expectations Survey report, which collated 1,200 responses from executives in the last three months of 2017, has revealed that business confidence for manufacturers has not been so high since June 2003.
Australian manufacturers had shown resilience in the wake of “last year’s automotive plant closures and ongoing concerns over energy costs”, according to the report.
The manufacturing as well as the construction sectors are now in a “strong upswing”, said Illion economic adviser Stephen Koukoulas, representing the top two sectors for the quarter.
“Manufacturing firms that were able to withstand the global financial crisis and the Australian dollar above parity are now in a healthy financial position, buoyed by a stronger global economy and a lower Australian dollar,” Mr Koukoulas said.
Overall business confidence across all sectors has risen 13.7 per cent when compared with the same period a year prior, while the Business Actuals Index saw an increase of 15.8 points, or 80.6 per cent, a peak not seen since March 2004.
The manufacturing and construction sectors seemed to be “in particularly good spirits”, underscoring the economy’s “underlying strength”, said Illion chief executive Simon Bligh.
“Expectations for profits and employment emerged as key drivers early on, but capital investment planning is also showing signs of growth, which is crucial for sustained momentum.”
Mr Koukoulas added, “It would appear that the positive tone from a stronger global economy, together with low interest rates and a competitive level for the Australia dollar are all providing a tail wind for the business sector.”