|According to illion’s latest Business Expectations Survey, Australian business conditions are buoyant amid strong performances in sales, profits and employment, with the Business Expectations index hitting 23.7 points in March, up 16.4% on the same period last year and the highest level since 2015.
Expectations for employment jumped 54% on the prior year to 17.8 points, with Transport, Communications & Utilities businesses most likely to hire during Q2 2018.
Selling prices and profits expectations are up 43% and 22% respectively. Actual profits for Q4 2017 rose 79% on the prior corresponding period, while the actual employment index surged 74% to an 18-year high and actual sales rose 36% to its highest level since 2004.
“Businesses have maintained a favourable outlook for the economy,” said Stephen Koukoulas, illion Economic Adviser. “The upbeat business mood fits with a range of other indicators pointing to buoyant conditions for the economy.
“The recent GDP result confirmed economic expansion of 2.4% through 2017, a pace broadly consistent with the business expectations index. At its current level, the index is pointing to a step up in growth in the first half of 2018.
“Expected sales maintain a positive outlook for Q2, which points to a pickup in economic activity in the first half of 2018. Low interest rates and a stronger global economy are factors helping to support the sales outlook.
“That said, employment expectations have edged lower, but remain at an overall buoyant level. A critical question for the economy and RBA interest rate policy is the strength of the labour market. If this turning point in employment expectations deteriorates in the months ahead, there will be further doubt about the prospects for interest rate rises within the next 12 months.
“It is particularly interesting that expected selling prices have increased sharply since the end of 2017. To date, the official inflation data show price pressures are well contained. The inflation risk evident in the survey will be a closely watched aspect of the economy over coming quarters as it too will influence the RBA monetary policy considerations.”