Construction Activity Picks up Following Strong Sales and Profits

In BICSI Bytesby info@bicsi.com.au

A sharp improvement in the Australian construction sector’s sales and profits has created a level of confidence not seen since 2013, according to illion’s latest Business Expectations Survey.

 

The analysis found the increase in public infrastructure spending and early signs of a turn in business investment have led to ongoing strength in dwelling construction.

 

The analysis also reveals business confidence across all sectors is at a three-year high, with the Business Expectations Index up 16.8% year-on-year. Expectations for profits, sales and employment improved on a year-to-year basis, while expectations for capital investment was lower.

 

Stephen Koukoulas, illion Economic Adviser, said the on-going weakness in capital investment continues to be a challenge for the economy, adding: “Business leaders’ expectations for investment have improved over the past year but the pickup appears to have stalled for Q2 2018. While we don’t expect this to immediately impact the economic outlook, any further decline would be a concern.

“Employment expectations for Q2 edged lower, yet the overall picture is buoyant. The expectations of the business sector fit with the recent news on the economy which points to a gentle pickup in activity and strong profit growth.”

 

The analysis found a shortage of skilled labour is the number-one concern for businesses, with the issue overtaking the cost of utilities and operations as the biggest barrier to growth.

 

The results indicate a tightening labour market, with a lack of skilled employees available across many different sectors. The two options to break this deadlock are declining demand or increased wages, and the latter would be preferable for business and consumer confidence.