The 2018 outlook for Australian manufacturing continues to be positive, according to the latest Australian Chamber-Westpac Survey of Industrial Trends shows.
The June 2nd Quarter result, released today, shows further gains in manufacturing output.
“The Westpac-AusChamber Actual Composite Index rebounded in June 2018 to 63.8 from 59.4 in March,” Westpac Senior Economist Andrew Hanlan said.
“Positive conditions in June reflect the boost to manufacturing from increased investment in both state infrastructure projects as well as private commercial building.
“Notably, state governments continue to add new projects to the investment pipeline.
“A relatively low Australian dollar and robust global growth are also supporting exporters.
“The level of home-building activity is still high but is now turning lower and consumer spending growth is currently a little below trend.
“A more pressing negative is the continuing intense competition from offshore.
“Expectations are positive, centred on new orders and output, as well as a renewed expansion in employment.
“The survey result continues to reflect an upbeat mood.
“The uptrend in exports has continued at a moderate pace after stumbling back in 2016.
“The investment outlook for the sector is positive in response to rising demand and improving profitability.
“A net 22% of firms expect to increase equipment investment in the next year.
“The survey’s Labour Market Composite, which broadly tracks economy-wide jobs growth, points to solid jobs growth over the second half of 2018.
“The index correctly foreshadowed the sharp acceleration in Australian employment through 2017, as well as a softer start to 2018.”
James Pearson, Chief Executive Officer of the Australian Chamber of Commerce and Industry, said:
“We welcome the ongoing overall outlook for business, with confidence remaining strong, general business expectations firming and signs of solid jobs growth for the rest of the year.
“Likewise, we are pleased to see the healthy rise in the net indicator for manufacturing output from 31% to 40%. This the sixteenth quarter of successive growth from a rising base.
“It is consistent with a growing number of firms intending to increase their spending on plant and equipment in response to rising demand.
“However policy uncertainty at home and internationally remains a concern.
“We need to get energy costs down and lock in business tax cuts to help Australian firms to keep up with the intense competition from offshore.
“And we need to keep public sector finances under control to ensure we are well-positioned to deal with any hiccups in the global economic outlook.”
There were 271 respondents to the Australian Chamber-Westpac Survey of Industrial Trends from across the manufacturing sector.
Scores above 50 indicate positive responses outnumbered negative ones.
The survey, Australia’s longest-running business survey, dates from 1966 and provides a timely update on the manufacturing sector and insights into economy-wide trends.
The survey results are available at www.australianchamber.com.au
The Australian Chamber of Commerce and Industry is Australia’s largest business representative group, its membership comprising over 80 State and Territory Chambers and Industry Associations covering all sectors of the economy.
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