Latest Dun & Bradstreet business expectations survey reveals solid outlook for five of six key indicators
September 7, 2010
The confidence of Australia’s executives is showing clear signs of improvement, with expectations for five of six key indicators of business strength rising significantly.
The latest Dun & Bradstreet Business Expectations Survey reveals solid expectations for growth in sales, profits, inventories, capital investment and selling prices during the December quarter.
However, firms remain subdued on hiring intentions.
The profits index has risen to its highest level in six years, with a ten percentage point climb since the September quarter taking the index to 22.
One third of firms (34 percent) expect that profits will increase during the December quarter, while 12 percent anticipate a decrease.
Retailers have experienced the most significant increase in expectations, rising 17 points to an index of 25.
Conversely, non-durables manufacturers have the lowest profits expectations, with the net index at 17.
Expectations for improved sales are driving the rise in the profits index.
Forty-seven percent of firms expect an increase in sales in the December quarter 2010, while 14 percent anticipate a decrease.
Increased sales expectations are flowing through to inventories.
This index has reached its highest level in more than six years following an increase of five points since the previous quarter.
Twenty-one percent of executives expect to increase inventories, while nine percent plan to reduce stock levels.
Capital investment expectations have risen five points to an index of 18.
Meanwhile, selling price expectations have risen by three points to an index of 20.
One in four (26 percent) firms expects to raise prices during the December quarter, while
6 percent expect to lower prices.
Employment expectations are unchanged on the September quarter 2010 – eleven percent of firms are planning to increase staff levels, while six percent expect to reduce employee numbers.
OUTLOOK ‘PROMISING’
According to D&B’s CEO Christine Christian, confidence is returning and the outlook for the back half of the year is promising.
“The turn around in the expectations of Australia’s executives since the previous quarter has been quite remarkable,” Christian says.
“The latest survey shows that five key indicators of business strength have improved relatively significantly, with certain indexes rising to the highest level in six and seven years. The sales index is particularly strong and it is driving the increased level of expectations in profits, inventories and capital investment,” she says.
“We have also seen some quite substantial improvements in the actual index since the depths of the crisis, with the improvements experienced during the June quarter playing into confidence levels as we head towards the end of the year.”