Results released today from Dun & Bradstreet’s May Business Expectations Survey have highlighted a continued downward trend in expectations for the three-month period to 30 September 2016.
With over a third of businesses surveyed believe consumer confidence will have the most impact on operations in the quarter ahead and say as the impending July federal election could be impacting optimism.
According to Stephen Koukoulas, Economic Advisor to Dun & Bradstreet: “The slide in the Business Expectations Index has continued into May, reaching its lowest level in two and a half years. The ‘actual’ performance of the economy has also weakened, which points to a slowing rate of economic growth in the first part of 2016.”
Koukoulas also noted that “of even more concern is the fact the weakness appears to have continued into the June quarter with expected sales, profits, employment and selling prices all reaching new lows in the current cyclical downswing. The outlook is deteriorating rapidly.”
“The March quarter GDP data released last week confirmed a solid rate of GDP growth, but ongoing weakness in national incomes and falling profits in the Australian Bureau of Statistics data fit with the weakening in business expectations. The relatively good news for the economy seen in late 2015 has turned sharply lower in the middle of 2016, with the focus on the election campaign dominating the news and this is eating away at the business sector,” Koukoulas added.
Issues expected to influence operations in the September quarter 2016:
- 55.6 percent of businesses are more optimistic about growth in the next 12 months compared to 2015, while 34.5 percent are less optimistic and 9.9 percent are undecided.
- At 35.5 percent, consumer confidence is identified as the issue most likely to influence business operations in the next quarter, followed by cash flow at 15.1 percent and the level of the Australian dollar at 13.0 percent.
- 21.6 percent of businesses see weak demand for their products and services as the biggest barrier to growth in the year ahead, while 13.7 percent see utilities and operating costs as the biggest barrier.
- 37.7 percent of businesses reported having a customer or supplier that became insolvent, or was otherwise unable to pay them in the past year.
- 44.3 percent of businesses would choose to miss payments to trade suppliers if unable to pay all their bills on time, followed by a business credit card at 15.8 percent.
- 25.4 percent of businesses would prefer a higher Australian dollar and 16.1 percent a lower dollar, while 55.6 percent think that it doesn’t matter. 2.9 percent are unsure.
- 13.2 percent of businesses intend to seek finance or new credit in the quarter ahead to help their business grow, while 77.9 percent will not, and 8.9 percent are undecided.
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