AiG chief executive Heather Ridout.

The latest CEO survey by the Australian Industry Group (AiG) and Deloitte suggests that economy is rebounding, but at a gradual and uneven pace.

The report predicts that growth in the manufacturing, construction and services sectors is going to be reasonably solid in the year ahead, albeit uneven.

Despite the stronger sales and employment expectations, investment trends across these sectors remain "soft and conservative", says AiG chief executive, Heather Ridout.

"We expect business performance in 2010 to reflect the positive drivers such as improving consumer confidence, rising household wealth and exposure to strong growth in China. Partially offsetting these positives will be the fading of fiscal stimulus, rising interest rates and the dampening impacts of the stronger dollar on exporting and import-competing businesses."

The survey's highlights include:

*An improvement in activity is expected in 2010 in all three sectors surveyed, although it is likely to be stronger in the services and manufacturing sectors than the construction sector;
*Improving consumer confidence in incomes growth and employment prospects, rising household wealth and exposure to strong growth in China will drive growth in the coming year;
*The fading of government stimulus activity and rising interest rates will particularly impact on the construction industry;*Manufacturers, on average, anticipate a 5.6% increase in the nominal value of sales in 2010, to around $415 billion; in the services sector, sales are forecast to rise 6.6%; and construction sales are expected to grow by 2.5% in 2010;
*Employment will improve modestly. Building on gains late in 2009, the manufacturing sector expects a 2.9% lift; in the services sector, employment is anticipated to rise by 2.3%; while the construction industry is expecting only a slight improvement of 0.5%;
*Employers across the sectors are concerned about a possible re-emergence of skills shortages as the economy returns to growth and how this will impact on employment and wages;
*Spending on R&D and training will grow conservatively in 2010. Businesses in the services sector are likely to spend the most on R&D but training budgets remain tight, manufacturing up 3.4%, services 1.9% and construction 1.2%;
*The higher exchange rate will continue to cap exports in 2010. The services sector is expecting the biggest lift, 8.2%, bringing total exports in 2010 to around $57.7 billion.