02/10/2014 - 10:27

Low confidence doesn't reflect fundamentals: CCI

02/10/2014 - 10:27

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Consumer confidence in Western Australia is well below levels in the European Union, despite leading indicators suggesting there is a positive story in the state’s economy, according to Chamber of Commerce and Industry WA chief economist John Nicolaou.

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Consumer confidence in Western Australia is well below levels in the European Union, despite leading indicators suggesting there is a positive story in the state’s economy, according to Chamber of Commerce and Industry WA chief economist John Nicolaou.

The CCI consumer confidence index shows consumer pessimism is driven by the labour market and the political environment, with the 3 month index at 86.

A score of 100 indicates expectations are neutral.

Similarly, only 13 per cent of WA consumers believe the economy will perform stronger over the course of the next 12 months, compared to 19 per cent nation-wide and 27 per cent in the European Union.

Business confidence also sagged, with 18 per cent of businesses expecting improvement over the next year, compared to 25 per cent across the country and 40 per cent in the United States.

 - CCI Economics

Image source: CCI Economics

“To think that Western Australian consumers and businesses are more pessimistic than their counterparts across Europe, that does provide an insight into the mood in the WA economy and it’s really an area where we need to reshape the debate and change the narrative,” Mr Nicolaou said.

“The political environment and political uncertainty, both at a state and federal level, is driving down confidence.

“We do need to see our politicians at all levels understand the role they play… and articulate a vision.”

Data suggested there is still strong growth ahead, with the CCI predicting growth of around 4 per cent in this financial year and the year following, down from a high of 7.2 per cent in 2011-12 but still around the long run average.

More than 26,000 residential construction projects commenced in the last year, and in non-residential construction, almost $5 billion of activity is in the pipeline.

Overall, around $240 billion of investment is still on the table through a variety of projects, whilst about $140 billion is underway.

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