Confidence has continued its upward trajectory in the corporate sector, although businesses remain cautiously optimistic as concerns over weak demand and low consumer confidence weigh on their outlook for the final quarter of 2015.
The record Sales Expectations result seen in last month’s preliminary survey has been supported by Dun & Bradstreet’s latest Business Expectations Survey, which reveals solid increases in Profit and Employment Expectations, which rose from 15.9 and 11.7 points in Q3 to 23.5 and 15.5 points respectively.
Capital investment remained in the doldrums, reflecting a disconnect between growing business sentiment and a reluctance to invest or take on debt. The positive outlook wasn’t unfounded though, with the Business Actuals Index for the June quarter also rising sharply to 10.4 points, significantly higher than the 6.6 points of the preceding quarter and the 6.7 points recorded at the same time last year.
Dun & Bradstreet’s Business Expectations Index, the average of the survey’s measures of sales, profits, employment and investment, has increased from its Q3 2015 low of 17.2 points, to 23.2 points for the December quarter. At this level the index is still just shy of the 23.9 point peak for 2015 recorded in Q1, although it remains higher than the 20.3 points for the same period last year.
The Business Expectations Index is an aggregate of the survey’s
measures of sales, profits employment and investment expectations.
Expectations for the price of goods sold eased marginally lower, with 24.1% of businesses saying they expected to reduce prices in the coming quarter, down from 24.4% in the preceding quarter but higher than the 23.7% recorded this time last year.
According to Adam Siddique, Head of Corporate Affairs at Dun & Bradstreet, the survey results consolidate the initial Q4 findings of a shift in sentiment.
“The latest results confirm the preliminary Q4 findings, which revealed a distinct shift towards a more positive economic outlook in the short-term. Sales Expectations continue to drive the overall sentiment, with profit and employment tracking a similar path, albeit at a slower pace.
“Consumer confidence and weak demand for products and services remain the principal concerns. This uncertainty could explain business owners maintaining their ‘wait and see’ approach when it comes to seeking credit for expansion and planning capital investment,” Mr Siddique added.
“Nonetheless, we’re seeing robust levels of optimism across all sectors in the Australian business community. There is no avoiding the interconnected nature of global markets, however, and the Australian economy will likely be tested in the coming months by the upheaval affecting global stock markets.”
To read the full report click on this link: 2015-09-12 DB Business Expectations Survey – Q4 2015 – interim