Twice as many businesses intend to increase their levels of capital investment in the months ahead compared to those which will reduce their spending, with Australia’s record-low borrowing costs and steady levels of confidence about growth during this year encouraging executives to prepare for stronger trade.
According to Dun & Bradstreet’s latest Business Expectations Survey, the capital investment index for Q2 2014 has risen to 10.1 points, up from five points a year earlier. With nineteen per cent of businesses planning to lift their business spending, compared to the nine per cent that plan to invest less, the index has now risen for a fourth consecutive quarter.
Corresponding to the lift in investment plans, D&B’s survey shows that borrowing intentions are being sustained at a healthy level, following a subdued 2013. D&B’s findings reveal that 18.4 per cent of companies plan to access new finance or credit in the next three months for the purpose of growing their operations, compared to nine per cent at the same time last year.
The more positive borrowing and spending outlook comes despite recent corporate requests for assistance, underscoring the resilience of the current level of business confidence. D&B has found that 64 per cent of businesses are more optimistic about growth this year compared to 2013.
Additionally, when asked to identify their biggest barrier to growth this year, the most common response from business was ‘no major barrier’ (32 per cent), ahead of a slow demand for products (23 per cent) and online selling by competitors (11 per cent).
“After reining in their expenses through much of last year, businesses are showing a greater appetite for investment, which bodes well for the general performance of the economy this year,” said Gareth Jones, CEO of Dun & Bradstreet.
“We have recently seen sales expectations hit a 10-year high, and so it follows that businesses are also looking to borrow, invest and grow their operations to prepare for increased activity.
“While recent high profile corporate announcements on jobs and operations in Australia have highlighted the challenges that remain for a number of industries, we are still seeing year-on-year improvements in the general business outlook,” Mr Jones added.
To read the full report click on this link: Businesses signal spending intentions – DB Business Expectations Survey – Q2 2014 – interim
Source: D&B Australia