Concern over interest rates falls with anticipated rate cut

Businesses are showing renewed optimism about trading conditions in the New Year off the back of better than expected results in the September quarter and an anticipated cut in interest rates.  Dun & Bradstreet’s latest Australian Business Expectations Survey found that firms were anticipating improved performance across sales (+11), profits (+2), employment (+7) and investment (+7) for the first quarter of 2012, with a 25 per cent fall in the number of firms anticipating being impacted by interest rates.

According to Dun and Bradstreet CEO, Christine Christian, talk of a possible interest rate cut by the Reserve Bank appears to have buoyed executives, particularly in the small business sector. “Growing positive sentiment and a renewed interest in hiring staff and increasing investment amongst Australian firms indicates a refocus of efforts on growth rather than just survival – if only in the short term,” Ms Christian said.

The upward trend in expectations reflects stronger than expected sales and profit performance in the September quarter, particularly in the manufacturing and wholesaling sectors.

The D&B Business Expectations Survey shows that for the March 2012 quarter:

  • Sales Expectations are now at their highest level in twelve months. Sales expectations are particularly strong for wholesalers, up 23 points;
  • Employment Expectations are also at their highest level in twelve months and are strengthening across all sectors;
  • Profit Expectations have continued to recover from the first negative index in two years but remain more than 20 points below this time last year;
  • Investment Expectations have risen seven points and are now significantly above the long-range average; and
  • Inventory Expectations have jumped 12 points, underlining improving sentiment in sales expectations.

In addition, the outlook for selling prices continues to be subdued, down two points for the quarter, and 16 points below the long-range average.

These figures align with recent CPI data which indicated the better than expected inflation result was being driven by flat or falling prices for discretionary items such as electronics and motor vehicles – while essentials such as rent and utilities rose significantly.

To read the full story click on the attachment: Dun Bradstreet Business Expectations Survey October 2011

Source:  Dun & Bradstreet Australia