Australia | Oct 04 2016
Dunn & Bradstreet’s latest survey suggests improvement for Australian businesses through the December quarter, albeit the numbers not as buoyant as they were a year ago.
By Greg Peel
The positive tone of Australian business expectations noted in the June quarter has carried into the September quarter, according to Dunn & Bradstreet’s latest Business Expectations Survey. That said, expectations heading into Christmas 2016 are still more subdued than they were heading into Christmas 2015.
Businesses expect December quarter improvement in all of sales, profits, employee numbers and selling prices, albeit each one of these components trails expectations from a year ago. Capital investment expectations continue to provide a drag.
The generally positive tone points to an ongoing solid pace of expansion for the economy over the remainder of 2016, economic advisor Stephen Koukoulas suggests, aided by record low interest rates and, Koukoulas believes, “evidence of policy progress from the re-elected Turnbull government”.
A belief that might cause some bemusement.
Dunn & Bradstreet’s Business Expectations Index for the December quarter saw a gain to 17.0 from 12.4 for the September quarter, down from 21.8 a year ago.
The profit expectations component rose to 17.1 from 7.7, down from last year’s 22.9. Employee hiring expectations rose to 13.0 from 8.2.
Selling price expectations remained positive but flat on the September quarter at 9.3, down from 16.2 a year ago. The result is consistent with recent near-record low inflation. Capital investment expectations was the only component to post a decrease, to 7.7 from 10.3 in the previous survey and 11.9 a year ago.
The drop in capital investment is a concern to Koukoulas, given resource sector investment plans are continuing to decline. While resource sector investment will soon bottom out given the pending completion of the big LNG facilities, investment ex-resources is yet to offer any future capital expenditure upside.
The most buoyant survey results came from the retail sector, as we enter that sector’s critical quarter. While selling prices are still expected to decline for retail, consistent with ongoing discounting, all of sales, employee numbers, profits and capital investment are expected to improve.
The Dunn & Bradstreet survey also looked at actual results for the September quarter. The Actuals index rose to 8.9 from 6.1 in the June quarter, driven particularly an increase in the profits component to 7.9 from 1.1.
And looking further ahead, the survey found 58% of businesses are more optimistic about business growth in 2017 compared to 2016. The services sector is the most upbeat, with 66.7% of businesses more optimistic. This sector expects improvement in sales, profits, employment and selling prices, but unfortunately even the services sector expects lower capital investment.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.