States converge into a ‘one speed economy’ as Victoria takes the confidence baton from NSW
Western Australia is showing clear signs of emerging from its mining-boom hangover with confidence levels matching that of NSW according to the latest ANZ/Property Council Survey.
Nationwide confidence fell slightly from 141 to 139 for the March 2018 quarter with state performance converging. A score of 100 is considered neutral.
“While we are slightly off the peak of the December quarter, we see continued strong confidence across all jurisdictions and the tightest state convergence in the survey’s history”, said Ken Morrison, Chief Executive of the Property Council of Australia.
“NSW was the most confident state for 15 consecutive quarters, but it has now been bested by Victoria, which leads the nation in confidence, staffing level expectations and forward work schedule expectations.
“Confidence levels increased across all jurisdictions over the year, except in NSW and the ACT. The major turnaround has been Western Australia which has witnessed a remarkable 42-point rise in confidence over the year.
“The construction outlook is positive across the various market sectors as well. The industrial property, retirement living, and tourism sector are reporting the strongest outlook of construction since this survey began. Underpinned by the continued strong performances of our two largest states, we continue to see strong office capital growth expectations.
“While expectations about national economic growth, staffing levels and forward work schedules all declined slightly, these still remain firmly in positive territory.
“As well, in all states except NSW, the industry puts state government performance in negative territory. Perceptions of the Federal Government’s performance continues to be negative across the country.”
Daniel Gradwell, ANZ Senior Economist said the gap between the mining and non-mining states is closing.
“Western Australia was once again the biggest mover in the quarter, with sentiment leaping to the strongest level since 2013. It’s important to note that this isn’t a one-off result. After sentiment in the western state settled at low levels through 2016, it has steadily increased over the past 12 months.
“There are a number of factors behind this improvement. The decline in the mining sector is past the worst, and in 12 months’ time will most likely be entirely behind us. We are slowly seeing an increase in activity outside of the mining sector, with an increase in construction in the tourism sector in particular. The upshot is that survey respondents’ views on Western Australia’s economic growth prospects, over the next 12 months, are the strongest on record.
“However, we would caution against getting too carried away with the good news just yet. Parts of the state will still suffer as the remaining mining investment projects wind up, and these regions are likely to see further job losses. Further, the improvement in sentiment is only useful if it translates into actual activity. The early signs are encouraging, but there is still a long way to go.”
Mr Gradwell said that the optimism around the construction sector was supported by data.
“Commercial building approvals are trending around the highest levels on record, led by the offices and tourism segments. In addition, CAPEX data show that non-mining firms expect 2017-18 to post the strongest investment growth in a decade. The vast majority of this growth is set to come in the form of buildings and structures, supporting the positive construction outlook.
“In line with the strong construction pipeline, firms report that they will have solid demand for staff over the next 12 months. While staffing expectations remain elevated, they did pull back slightly in the March survey, from the previous record level. 2017 was one of the strongest years of employment growth in recent history, and it is not surprising that we may see some cooling in the labour market through 2018.”
For more information contact: Ken Morrison | E firstname.lastname@example.org
To find out more about the ANZ/Property Council Survey and our Supporting Sponsor RCP, visit http://research.propertycouncil.com.au/research-and-data/anz-property-council-survey
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