Credit concerns fall; businesses expect wage rises: D&B

Date: 07.07.2010

Concerns over access to credit fall, but businesses prepare for higher wages and fuel bills

By Rob McKay | July 7, 2010

Could the big credit squeeze following the global financial crisis be ebbing away?

It seems those who run the nation’s businesses are beginning to believe it.

The latest Dun & Bradstreet Australia National Business Expectations Survey of 12,000 firms shows lower executive concern that access to credit will be the most important business influence in the quarter ahead.

At 8 percent, it was "well down on the 19 and 17 percent recorded in the previous two surveys", D&B says.

More importantly, from an operational point of view, 14 percent of executives believe fuel prices will be their main concern in the quarter ahead, up 3 percent in one month.

The survey says 28 percent of firms expect wages growth to be the primary business influence – a rise of four percent in a month.

The apparent confidence in the future on an issue that has had transport operators fuming for much of the past 18 months comes despite 12 percent of firms having less access to credit in the last quarter.

The same number had greater or better access and that recent changes in credit market conditions have negatively impacted 47 percent of firms.

However, the malign hold of the global financial downturn still has strength, with 53 percent of executives being negatively impacted by lagging business to business payment terms.

The latest finding represents a 17 percent rise since April.

With talk of a double-dip recession possible in the US and Europe, the edge of high confidence that surfaced last quarter dulled slightly. Expectations for inventory growth, selling price, profits and capital investments were all recent highs.

Significantly, sales expectations were down 15 points to an index of 18.

"Australian executives are indicating that the new financial year won't be as buoyant as previously anticipated," D&B says.

"The fall in the selling prices index indicates that monetary tightening and the end of the [Federal] Government's stimulus package are having the desired effect on inflation.

"However, the considerable fall in executive expectations for sales suggests that these factors are also impacting the willingness of firms and households to spend, which could result in lower growth than expected in the year ahead."