Deloitte business outlook report finds positive signs for ACT economy
The ACT economy is back in a "sweet spot" after bearing the brunt of public sector cutbacks in recent years, says a new report by the Deloitte consultancy.
The latest quarterly business outlook report found positive signs for the capital across the housing, construction and public sectors.
Work on the Canberra light rail is doing a lot of heavy lifting in the ACT economy, according to a new report by Deloitte. Photo: Rohan Thomson
"The good news for the ACT is that, after the cutbacks and public sector hiring freezes of recent years, the [Federal government] are returning to more of what might be considered business as usual," the report concluded.
"That big switcheroo is ultimately going to be good news for Canberra's economy, given the high concentration of the public sector in the local economy."
A number of indicators, such as the growth in retail trade and small business confidence, reflected the somewhat-buoyant mood in the ACT, the report found.
"Population growth has picked up, and is matching the national average, while job growth is quite solid, and is roughly moving in line with the national average.
"And the unemployment rate is well down on the levels seen a couple of years ago, although job vacancies have levelled off of late."
In contrast to a more tempered outlook at the national level, Canberra's housing market looked set to continue experiencing encouraging signs of growth.
However, the report did find some small need for caution.
"Canberra house prices have been rising, while there have also been significant signs of improvement in the rental market.
"Even so, and despite remaining strong, the growth in housing construction eased in the latest data, while the value of residential building approvals has fallen over the past year.
"That may suggest a more moderate outlook for the territory's housing construction activity agenda going forward."
There was also good news in the outlook for commercial construction.
"With some $1.5 billion in projects underway and a healthy pipeline of work, the nation's capital is looking like its head is screwed on straight.
"Construction of the first stage of the Australian National University's $220 million Union Court redevelopment is set to kick off in July, while the $300 million casino redevelopment is also scheduled to break ground in the coming months."
Although construction work on the light rail was doing a lot of heavy lifting in the ACT economy, the report did point out a notable lack of other large-scale engineering projects.
"In fact, the light rail project accounts for almost three-quarters of engineering construction work underway, and the pipeline of projects is rather underwhelming as well.
"That said, planning is underway on extending the rail line from the city to Woden. While this is some way off, it's worth watching closely."
Interestingly, the most significant risk flagged in the report was not rising interest rates or the housing bubble bursting, but the possibility of a future government holding greater sway over the Senate.
"Our assessment remains that such a government would be tougher on ACT-related spending.
"If that occurs, greater discipline on spending and public service numbers would take a toll on the ACT's growth.
"However, for now, the ACT's economy is in a sweet spot."