New survey predicts economic pain in December quarter

High fuel prices and declining economic conditions continue to weigh heavily on business, according to a new survey

Fuel prices continue to cripple businesses, with a new survey anticipating greater pain as a result of cost pressures and declining economic conditions.

The latest Dun & Bradstreet Business Expectations Survey shows a 31 percent increase—up to 92 percent—in the number of executives saying fuel prices are having a detrimental impact on their business.

The survey predicts the December quarter will bring a steep decline in profits, employment growth and capital investment.

As a result, 63 percent of executives expect to raise selling prices as business confidence plunges amid tightening profit margins.

"A slowing economy combined with high funding and goods costs have been eroding the profit margins of Australian businesses for many months now," Dun & Bradstreet Chief Executive Christine Christian says.

"As a result we have seen business confidence fall away dramatically and expectations for the coming quarter have hit lows not seen since the 1990s."

However, Christian says the Reserve Bank’s recent decision to cut interest rates will help businesses by having flow on effects on spending and investment.

Of the executives surveyed, 38 percent, listed interest rates as their primary concern in the coming quarter.

Dun & Bradstreet economic consultant Dr Duncan Ironmonger says further interest rate cuts are needed before business confidence is restored.

The survey also found 70 percent of executives anticipate a tightening credit market will have a negative impact on operations, while 21 percent listed wages growth as their primary concern in the December quarter.

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