Regional economic indicators are pointing to a cautiously optimistic outlook as the Hunter makes a less difficult economic transition from the resources investment cycle than was expected, according to the Hunter Valley Research Foundation's (HVRF) latest Hunter Region Economic Indicators.
Senior Research Fellow Jenny Williams said that business and consumer confidence have lifted, although downside risks suggest the transition will continue to be slow and uncertain through early 2014.
“There are signs of pick-up in housing prices and residential approvals in response to sustained low interest rates,” Jenny said.
“Consumer confidence in the regional economy entered positive territory in September for the first time in two years. This is underpinned by two quarters of positive indices for personal financial circumstances and planned expenditure.”
The full results were released at the HVRF Hunter Region Economic Update breakfast this morning.
The research found that Hunter businesses overall reported some improvement in trading performance over the prior three months and expectations of further modest gains. This is a welcome uplift from the record low levels seen in the June quarter. The rebound in confidence among Hunter businesses is consistent with national survey results, reflecting anticipation of a change of Federal Government and expectations of policy initiatives to support increased business activity. It may also reflect a degree of over-reaction to the reported downturn in resource-related investment that has been the major driver of economic growth in the Hunter for the last few years.
The improvement in business confidence is supported by a rise in consumer sentiment, continued historically low interest rates, and the positive impact on export-exposed sectors of a slowly-improving exchange rate.
However, uncertainties about translation of the new Coalition Government's policies into action and the overall pressures on governments for 'fiscal consolidation' may increase the lag between confidence and increased expenditure.
The breakfast featured a presentation on national and global economic conditions by CommSec Chief Economist and highly respected commentator Craig James. The University of Newcastle's Vice-Chancellor, Professor Caroline McMillen, also spoke about the importance of innovation to building strong regional economies.
To download the Hunter Region Economic Indicators for this quarter, visit the HVRF website.