Expectations within the building and construction sector in Australia have soared as leading indicators paint an encouraging picture of the sector’s prospects.
Unveiling the results of its latest survey of 1,200 enterprises, credit reporting company illion (formerly Dunn & Bradstreet) said its overall Business Expectations Index stood at 21.5 points – the highest level on record since the third quarter of 2015.
In construction, expectations (17.8) were almost three times their level at the same period last year.
Those in manufacturing, meanwhile, stood at their highest level since June 2003.
The survey also pointed to growing levels of capital investment – albeit with investment expectations having moderated.
Across all industries, illion’s Capital Investment Actuals index rose by a quarter over the year to September 2017.
All other things being equal, greater capital investment should translate into healthy levels of major private-sector project work.
The results come amid both increasing optimism and healthy levels of new work across the building sector.
In housing, the seasonally adjusted number of new houses and apartments (21,055) approved for construction jumped to its third highest level on record in November.
Whilst this largely represented a spike in the statistically volatile multi-unit sector, optimism about housing’s future is on the rise more broadly.
Compared with what they were six months or a year ago, forecasters from the likes of Housing Industry Association and BIS Oxford Economics say they are more optimistic about both the duration of the current residential building boom and of achieving a ‘soft landing’ as the peak of the boom subsides.
Conditions are also improving in civil and commercial construction.
Participants of the most recent Construction Outlook survey conducted by Australian Industry Group and the Australian Constructors Association indicated strong expectations for an upswing both sectors throughout both 2018/18 and 2018/19.
With the seasonally adjusted value of non-residential building approvals throughout the six months to November ($24.557 billion) being up 16.3 percent compared with the six months prior to that, meanwhile, the pace at which new commercial building work is coming in has picked up.
Speaking about the broader business environment, illion economic adviser Stephen Koukoulas said confidence was being driven by higher levels of profits, sales, selling prices and employment.
He said the broad nature of confidence boded well for the overall economy and increased the likelihood that the RBA would hold rates steady in the near-term rather than ease monetary policy further.