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Solid growth ahead for Australian industry: survey

23-03-2010
by 
in 

Growth in the manufacturing, construction and services sectors is going to be reasonably solid, though uneven, in the year ahead, according to a new report.

The latest Australian Industry Group/Deloitte CEO survey, Industry in Recovery Mode in 2010, makes the growth prediction given the strong showing expected from the mining sector.

Improving consumer confidence in incomes growth, brighter employment prospects and rising household wealth will further boost these sectors, according to the survey.

"We are very pleased the economy is rebounding and looks set to consolidate this year with improving conditions anticipated across manufacturing, services and construction, said Ai Group chief executive, Heather Ridout. 

“However, the recovery is uneven and the rebound will not be as sharp as that which occurred following previous downturns, Mrs Ridout said.

“Despite the stronger sales and employment expectations, investment trends across these sectors remain soft and conservative.

"We expect business performance in 2010 to reflect the positive drivers such as improving consumer confidence, rising household wealth and exposure to strong growth in China.  Partially offsetting these positives will be the fading of fiscal stimulus, rising interest rates and the dampening impacts of the stronger dollar on exporting and import-competing businesses.

"The challenges for policy and for businesses will be to strengthen the recovery while addressing the ongoing requirement to build on the foundations of longer-term growth."

Manufacturing partner for Deloitte, Damon Cantwell, said 2010 would provide a range of opportunities for companies to recover ground.

"While 2009 was characterised as a year founded on survival, 2010 offers real opportunities for growth," Mr Cantwell said.

Mr Cantwell warned companies to ensure they were across what the data was saying about how their individual sector was likely to fare through the recovery.

"The Ai Group CEO survey points to specific strategies that companies can adopt to position themselves to make the best of the recovery.

"This includes engaging with growth markets including China and India, and ensuring they are making the most of the support available through government initiatives for R&D and innovation," Mr Cantwell said.

Manufacturers on average anticipate a 5.6 percent increase in the nominal value of sales in 2010, to around $415 billion.

In the services sector sales are forecast to rise 6.6 percent and construction sales are expected to grow by 2.5 percent in 2010.

Employment is expected to improve “modestly.” 

Building on gains late last year, the manufacturing sector expects a 2.9 percent lift in employment, the services sector is expecting a 2.3 percent rise,
while the construction industry expects only a slight improvement of 0.5 percent.

Employers across the sectors are concerned about a possible re-emergence of skills shortages as the economy returns to growth and how this will impact on employment and wages.

Spending on R&D and training will grow conservatively in 2010. Businesses in the services sector are likely to spend the most on R&D but training budgets remain tight – manufacturing up 3.4 percent services 1.9 percent and construction 1.2 percent.

The higher exchange rate will continue to cap exports in 2010. 

The full survey can be found at: http://www.aigroup.com.au/policy/reports

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