There are encouraging signs for the future, according to speakers at Illawarra Regional Information Service's annual economic outlook lunch in Wollongong yesterday.
IRIS executive director Simon Pomfret said two new surveys had shown business conditions recovering, local business confidence strengthening and consumer confidence improving.
He predicted that by Christmas, the region would see more businesses on the upward than on the downward trend.
The financial, property and business services sector indicated things were starting to get better and the retail and recreation sector had just enjoyed some remarkable quarterly growth, he said.
"Coal mining is also still travelling along quite well."
Mr Pomfret said consumer confidence had been holding the region back but there were now some encouraging signs.
One concern was that while interest rates had come down, the number of people who thought it was a good time to buy a house had not risen.
Unemployment in the region was still about 7 per cent. "We have done well to keep unemployment there given recent events."
Mr Pomfret said there had been an investment surge in commercial construction activity.
"We are starting to see some more private sector development in the last 12 months."
That comes as GPT Group expects to have one crane in place on its Wollongong shopping centre development next week and two on the site by Christmas.
NAB chief economist (markets) Rob Henderson said that overall, the Australian economy was in a good place and as close as an economy could get to having internal balance but that did mask variations in a multi-speed economy.
He believed the investment boom phase in commodities would continue for some time and mining would remain a key.
He expected the peak in investment activity for mining projects to occur in late 2013 or early 2014.
"There is starting to be a slowdown in investment happening but there is still 12 to 18 months of the mining investment phase continuing ... and after the investment comes increased export activity," Mr Henderson said.
Household services were also important to the economy and that sector continued to enjoy moderate growth, he said.
Construction was on the way up but was performing differently in various sub-sectors.
Manufacturing and retail activity were still fairly soft but he was optimistic about the outlook for manufacturing which had become more entrepreneurial.
"Manufacturers are increasingly innovative, have very high labour productivity and are very close to their customers," he said.