The results from Dun & Bradstreet’s December Business Expectations Survey suggest both caution and optimism in the Australian business landscape as 2016 kicks off.
The general outlook remained relatively muted, with businesses reporting lower expectations for Sales, Profits, Employment and Selling Prices for the first quarter of 2016 compared to the final quarter of 2015.
However, the investment outlook took a positive turn, with the Capital Investment Index up to 12.6 points, compared to 11.9 points in the December quarter of 2015. Some 23.1 per cent of businesses said they intend to increase spending on Capital Investment in the first quarter of 2016 compared to the fourth quarter of 2015.
The intention to increase Capital Investment in the coming quarter continues a recent trend: actual Capital Investment activity increased in both the June and September quarters. In the June quarter the index rose from 6.2 points to 8.3 points and in the September quarter it increased to 10.8 points.
According to Adam Siddique, Head of Group Development at Dun & Bradstreet, the latest results may indicate a shift in investment sentiment.
“We are finally seeing some positive movement in the Capital Investment space, which is encouraging and something we will track for further signs of improvement in the short-term. As flagged in last month’s survey, sustained business investment across all sectors is a key driver of future economic growth,” Mr Siddique said.
“The slight fall in the Employment Actuals Index is noteworthy given the surprisingly strong ABS employment figures released in December. Aside from seasonal fluctuations in jobs growth, we would expect to see Employment increase alongside Investment, as business activity ramps up.
“Looking farther afield, the US Federal Reserve has finally brought to an end an unprecedented period of zero interest rates. While it is too soon to assess the impact this will have on the domestic corporate landscape, we can be certain we are now entering a new phase for global monetary policy makers,” Mr Siddique added.
Dun & Bradstreet’s Business Expectations Index, the average of the survey’s measures of Sales, Profits, Employment and Capital Investment, has fallen to 18.9 points for the first quarter of 2016, down 2.9 points from 21.8 points in Q4 of 2015, and down 5 points from 23.9 points in Q1 of 2015. Nonetheless, it is significantly higher than the 10-year average of 6.8 points.
To read the full release click on the link: 2016-Q1 Final DB Business Expectations Survey