Hunter businesses retain optimism but households pessimistic.
Businesses’ expectations for the Hunter economy for the next 12 months somewhat optimistic and steady over 2019.
This follows a sharp downward correction in levels of optimism in the second half of 2018.
However, household confidence in the regional economy – both short and long term – weakened notably in the second half of 2019, the Hunter Research Foundation (HRF) Centre reports.
Households are now on average pessimistic about the fortunes of the Hunter economy in the next 3 and 12 months.
Dr Anthea Bill, HRF Centre’s Lead Economist, presented the latest national and regional economic update at the Hunter Economic breakfast at NEX Wests City on Friday, 28 February 2020.
Business performance partly rebounded between June and December last year,” Dr Bill said.
This was driven by improvements in profitability and trading. Business confidence, however, softened markedly. Consequently, capital expenditure intentions of business over the next 12 months weakened.
Hiring intentions also remain below average.”
Hunter house prices declined by over 4 per cent for the year to September, although quarterly declines appear to be slowing. New house approvals also fell by 9 per cent in the region, led by a 30 per cent fall in Lake Macquarie. The value of the pipeline for residential and non-residential approvals in the region still stands at $2.9 billion, owing to an increase in the value of non-residential in late 2019.
Dr Bill said Hunter households’ spending for the last 3 months increased but remains below the December average for the last two years and well below pre-GFC values. Australian consumers continue to be cautious, choosing to reduce their discretionary spending in favour of saving and paying down debt, Dr Bill reports. Private sector wage growth remains weak.
Ongoing weakness in the household sector may flow through to impact the region’s business confidence,” she said of the regional outlook.
On the upside, recovery in the housing market may bolster household spending in 2020, although wage growth is predicted to remain weak.”