BUSINESSES POSITIVE ABOUT ECONOMY

Written on the 9 May 2014

BUSINESSES POSITIVE ABOUT ECONOMY BUSINESSES remain optimistic about short-term economic outlook, despite proposed spending cuts in the Federal Budget according to research by Dun and Bradstreet.

Companies have predicted a boost in sales, employment and investment activity during the third quarter of this year in the latest Business Expectations Survey.

The sales index has lifted to a new 10-year high, with 44 per cent of businesses anticipating increased trade and just nine per cent expecting a reduction.

CEO Gareth Jones (pictured) says it’s encouraging to see the optimism continue, after a generally positive start to the year.

“All of the measures in D&B’s Business Expectations Index are up on last year’s readings and importantly employment and investment expectations, which fell into negative territory late last year, have now improved for a fourth consecutive quarter.

“The further lift in the employment outlook bodes well for the rest of the economy and provides support to opinions that the unemployment rate may have peaked following last month’s surprise fall to 5.8 per cent,” Jones says.

Confidence across industries remains high with 64 per cent of businesses expecting strong growth and 21 per cent indicating intentions to hire staff to accommodate the activity.

Manufacturing is notably positive, overcoming concerns about the Australian dollar and high-profile closures to 58 per cent (or 50.8 index points) of the sector anticipating a jump in sales.

 



Expected business profits continue to be on the rise, with 35 per cent looking forward to more revenue – in comparison to 15 per cent expecting a decline.

Economic advisor Stephen Koukoulas says there is a clear lift in economic activity.

“Expected sales have risen strongly since the middle of 2013 and are almost three times over the 10-year average, suggesting that economic growth is poised to rise to an above trend pace when the official data for the first half of 2014 is released.

“Encouragingly, the recent gains in expected employment have consolidated at a more favourable level and the capital investment outlook has maintained its improvement,” he says.

Koukoulas says the only downside is a “marginal pull-back” in expected profits, although that is from a high base.

 

 

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