Australia’s chief executives are optimistic about 2018 according to the Australian Industry Group 2018 Business Prospects report released today.
The survey shows general business conditions are expected to pick up this year for more businesses than in any of the previous five years.
Across all businesses, 42.3 per cent of CEOs expect an improvement to business conditions, 15.7 per cent expect deteriorating conditions (+26.7 per cent net balance) and 42 per cent expect no change in conditions.
The latest Business Prospects report reveals sales are expected to increase for 67.3 per cent of businesses in 2018, with 19.7 per cent expecting no change from 2017 levels and 13 per cent expecting a decline in sales in 2018.
Ai group chief executive, Innes Willox, said “Investment plans and expectations of employment growth are higher than at any time since 2012. If these plans and expectations are realised, 2018 would prove to be a defining year for the Australian economy.
“Looking to the year ahead, CEO’s expect general business conditions, turnover, employment growth and gross margins to be all higher than at any time in the past five years.
“If these positive expectations can be turned into reality we would see strong business investment and spending on training, R&D and technologies reaching post-GFC highs. And most importantly, we would see a year in which employment growth equalled or even exceeded the record jobs growth experienced in 2017.”
Ai Group’s annual survey of Australian CEOs’ was conducted in October and November 2017. CEOs across the economy were asked about business experiences in 2017 and expectations for 2018. Responses were received from the CEOs of 269 businesses.
More than half (57.6 per cent) of businesses in 2018 expect to employ more people, the first time in five years a majority of firms have predicted employment increases.
With 12.6 per cent of businesses planning to shed staff in 2018, a ‘net balance’ of 45 per cent of CEOs plan to increase employment this year. This is around double the next best net balance for expected employment growth from the previous five years.
The prediction of strong employment growth is allied to moderate wage rises. Only 4.6 per cent of respondents cite wages pressure as their leading concern this year.
Gross profit margins
Despite the boost to turnover expected, gross profit margins will grow in less than half of the firms (41 per cent) in 2018.
Rising energy prices are influencing business margins with a minority of CEOs (13 per cent) expecting deteriorating margins and 46.1 per cent expect no change (giving a net balance of 27.9 per cent).
This year’s survey indicates that many CEOs plan to maintain or increase spending with staff training topping the investment list (50.1 per cent); 48.3 per cent plan to increase their spending on new technologies; 26 per cent on R&D expenditure; and 36.5 per cent are planning to lift physical capital expenditure in 2018.