According to NAB’s quarterly business survey (Jan 2018) companies are expected to continuously improve business conditions and planning to lift investment and hire more people over the coming year.
NAB’s quarterly business survey found conditions were slightly higher in the final three months of 2017.
Business conditions are strong across all major industry groups except for retail and finance. Specially the construction industry is performing really well. ‘The improvement in construction conditions over the last twelve months is due to improved trading conditions, profitability and employment, and probably reflects the still elevated residential construction pipeline, infrastructure construction and the gains in non-residential building approvals last year. The lift in employment is particularly significant given the rising share of employment found within the construction industry.’ (https://business.nab.com.au/nab-monthly-business-survey-january-2018-2-28485/)
“The health of the retail sector remains quite critical to the economy given that consumption makes up the major share of the economy,” said NAB’s chief economist Alan Oster. “If subdued business conditions are telling us something about the mindset of the consumer, then faster and more sustainable growth will be more of a challenge if things don’t improve.”
Wages the Biggest Worry for Businesses
According to the NAB survey wage costs were a major factor in how businesses were feeling. At this point they are not sure whether this means wages will see an increase over the year or if they are trying to keep the wages the same in an attempt to preserve margins. Furthermore, the survey revealed that companies are having increased difficulties finding skilled workers to match their needs. This is ‘an encouraging sign for wage growth’ according to NAB economists. NAB is also forecasting a 5.25 per cent unemployment decrease by the end of the year.