SALES GROWTH HITS DECADE HIGH

Written on the 4 August 2015

SALES GROWTH HITS DECADE HIGH

THE Australian business community has a bright outlook for the fourth quarter, with sales expectations rebounding to their highest level in more than a decade.

Dun & Bradstreet's latest Business Expectations Survey shows sales expectations have hit 40.8 points, up 28.6 points compared to the last quarter.

Despite concerns surrounding weak demand for goods and services and declining consumer confidence, 48 per cent of companies anticipate increased sales this year.

D&B head of corporate affairs Adam Siddique says the combination of competitive pricing, lower Australian dollar, favourable borrowing costs and government incentives are contributing to the positive outlook.

"The strong survey results suggest businesses have a brighter short-term outlook than we've seen in recent months, which is a positive sign for increased economic activity during the second half of the year," Siddique says.

"The upward trajectory broadly reflected throughout the survey results is encouraging. The sharp rise in sales expectations is particularly noteworthy and may indicate the recently announced budget measures for small to medium-sized businesses are gaining traction.

"Similarly, the discussion around changes to GST for imported online purchases and the lower Australian dollar could also have provided a much-needed confidence boost across the business community."

The lift in sales expectations was also reflected in the outlook for profits, employment and selling prices, while capital investment expectations remained flat.

Optimism wasn't shared across all sectors, with sales expectations in the wholesale industry easing slightly to 33.4 points down from 34.2 in the previous quarter.

D&B economic advisor Stephen Koukoulas says the renewed vigour in business expectations will set the pace for the remainder of the year.

"The good news is that the overall level for the composite Business Expectations Index is consistent with GDP growth around 3 per cent," Koukoulas says.

"Of most encouragement is the strength in expected sales. Firms are looking for a strong pickup in activity through to the end of 2015, and this positive news is spilling over into higher expected profits, a lift in employment and steady capital expenditure.

"While business expectations can be fickle in the short-term, there is no doubt now that the business sector is taking advantage of the favourable environment to ramp up activity."

He says taking these circumstances into account, the Reserve Bank is likely to keep the official interest rate steady in the near future.

 


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