SYDNEY, Sept 20 Australian industry is
experiencing a welcome pickup in activity after a long period of
struggle, a survey showed on Thursday, and firms are hopeful the
recovery will extend for a few months more.
The quarterly survey from Westpac and the Australian Chamber
of Commerce and Industry (ACCI) found overall activity expanded
for the first time since the first quarter of 2011, helped in
part by cuts in interest rates in May and June.
The survey's Actual Composite index of conditions rose to
52.4 for the third quarter, up from 48.3 the previous quarter.
The Expected Composite index, measuring the outlook for the next
six months, also improved to 53.7, from 51.5.
"The improvement seen in the September quarter is surprising
but welcome," said Westpac economist Elliot Clarke. "Clearly the
rate cuts provided by the RBA over the past year have benefited
the sector directly and indirectly."
The Reserve Bank of Australia (RBA) has cut its cash rate by
125 basis points since November last year, taking it down to an
historically low 3.5 percent.
"While the Australian dollar remains a significant concern
for the sector, projected interest rate cuts will assist in
bringing about more appropriate financial conditions," said
The central bank has indicated it could ease gain if
necessary and markets are priced for a move to 3.25 percent by
November, if not next month.
Expectations of 'general business conditions' improved
significantly in the September quarter, with a net 11 percent of
respondents now expecting that conditions will improve over the
next six months. That compares with a net 21 percent who
expected conditions to deteriorate three months ago.
"The recent signs of stabilisation in residential and
non-residential construction have been particularly welcome
developments, giving manufacturers greater confidence," said
The survey's measure of labour demand increased in the
quarter, though that was mostly due to a sharp rise in the use
of overtime rather than new hiring.
Measures of inflation pressures in the survey remained
subdued. Manufacturing wage expectations eased back after a
spike in the second quarter, while growth in input costs
moderated. Average selling prices fell for the fifth consecutive
Manufacturers were also more optimistic on the outlook for
profits, with a net 13 percent of expecting their profitability
(Reporting by Wayne Cole)