BUSINESS OUTLOOK LIFTS AS YEAR ENDS

Written on the 6 October 2015

BUSINESS OUTLOOK LIFTS AS YEAR ENDS

BUSINESSES are expecting to see increased profit, sales and employment activity towards the end of the year, according to Dun & Bradstreet's latest Business Expectations Survey.

Data from the survey shows the percentage of businesses with a positive outlook has increased to its highest level since January this year, with 66 per cent of survey respondents feeling more optimistic about growing their business in the year ahead.

Dun & Bradstreet's Business Expectations Index, the average of the survey's measures of sales, profits, employment and investment, has increased from its 2015 low of 17.2 points, to reach 21.8 points for the December quarter.

At this level the index is still below the 23.9 point peak for 2015, recorded in the first quarter, although it remains higher than the 20.3 points recorded for the same period last year.

Adam Siddique, head of Group Development at Dun & Bradstreet, says the survey results represent a marked move towards a more optimistic fourth quarter outlook.

"The leap in positive sentiment indicated by the initial Q4 results has evened out during the quarter to represent a less dramatic swing," Siddique says.

"Nevertheless, we have seen an unmistakable shift to a more positive outlook compared to the prior quarter in terms of both actual and expected results.

"It should also be noted that the majority of the indexes remain well above their 10-year averages, which is encouraging as we look to 2016.

"Closer to home, it will be interesting to see how business responds to the recent leadership changes in Canberra, given the new Prime Minister's focus on economic reform and restoring business confidence."

Despite the broadly optimistic trend, capital investment expectations was the only index to take a backward step during the quarter, falling 0.9 points from the third quarter to mark its lowest point this year.

According to Stephen Koukoulas, economic adviser to Dun & Bradstreet, the generally upbeat tone of the survey has continued, although the pace of that expansion is uneven.

"The Business Expectations Index remains solidly positive firms are clearly benefiting from ongoing low interest rates and what is now a very competitive level for the Australian dollar of around 70 US cents," he says.

"Something of a concern in the survey is that actual levels of sales, employment, profits and capital expenditure have fallen well below expectations. In other words, the generally upbeat view of the business sector has not translated into an actual lift in business activity."


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