The latest D&B National Business Expectations Survey shows
Outlook for the June quarter 2009
- Sales and profits expectations continue to dive, 57% of firms anticipate declining sales and 65% expect declining profits
- Selling price expectations have eased slightly however three in four businesses (74%) expect to raise prices in the June quarter
- The employment growth indicator has dropped to the lowest level recorded by the survey
- Capital investment expectations have declined further, with 12% of firms expecting to decrease capital investment
Impacts of the Aussie dollar, credit market and petrol prices
- Seven out of ten (74%) firms have been negatively impacted by recent movements in the Australian dollar, a 62% increase since July
- Recent changes in credit market conditions have negatively impacted a net 47% of firms (54% negative and 7% positive)
- Forty six per cent of executives indicate that recent movements in petrol prices have positively impacted their business, down 7% since last month
Issues expected to influence operations in the June quarter 2009
- Fifty eight per cent of executives rank interest rates as the primary influence on their business in the June 2009 quarter, an increase of 22% since December
- A fall of 21% since December has 14% of firms ranking petrol prices as their primary concern
- Just 14% of executives expect wages growth to be their primary concern
Actual for December quarter 2008
- Forty six per cent of firms experienced lower sales, up 1% on September quarter
- Sixty two per cent of firms recorded lower profits, up 7% on September quarter
- Sixty six per cent of firms raised selling prices, unchanged on the September quarter
- The employment index moved 10 points further into negative territory
- The capital investment index fell three points to -6
Australia's economic outlook continues to worsen as executives' expect a further deterioration in business conditions and performance in the forthcoming June quarter. The results of the latest Dun & Bradstreet Business Expectations Survey, following the latest national accounts and GDP data from the ABS, provide further evidence that Australia will experience a difficult downturn as a result of the global economic and financial crisis.
The impact of the crisis is evident in executives' expectations for the June quarter, with 57% of firms anticipating declining sales and 65% having the same expectation for profits. Expectations for employment and capital investment are following the same downward trend, with 27% of firms expecting to cut back on staff and 12% anticipating a need to decrease capital investment.
Selling price expectations rose by 30% in the nine months from March quarter 2008 to December quarter 2008 and hit their highest level ever recorded in the March 2009 quarter. Expectations have dropped back 4% for the June quarter, however three in four (74%) firms expect that they will raise prices.
D&B Expected Sales, Profits, Employment and Capital Investment Indexes
Changing credit market conditions and a falling Aussie dollar continue to impact firms, with more than five in ten (54%) businesses negatively impacted by the credit market and more than seven in ten (74%) hurt by the falling value of the dollar. Wholesale businesses have reported the largest swing, with 43% indicating a positive impact in July and 84% now noting a negative affect of the dollar.
Downward movements in petrol prices have shown through with a decline since September of 89% in the number of executives negatively affected by fuel costs. Fewer than 5% of firms now report a negative impact while 46% report a positive affect.
Dun & Bradstreet's CEO Christine Christian believes the latest survey demonstrates that the global crisis has yet to fully impact Australian businesses and executives are expecting the domestic environment to get worse before it gets better.
"There is no doubt that we are not yet through the worst of the crisis and indeed many businesses are only just starting to feel the impact on the ground," said Ms Christian.
"The deteriorating outlook is evident in expectations across a range of indices but of most concern is the significant drop in employment expectations. This is a clear sign businesses are preparing for the worst and the impact on Australian households could be significant."
"This is a demonstration that not only has the Federal Government's stimulus package been necessary but more will be required before the end of 2009. The question is not whether the package could stop Australia sliding into recession but rather how much worse could it be without Government intervention?"
The dramatic reductions in the official cash rate since October have impacted executives' views on the issues that will influence their operations most in the June 2009 quarter. Fifty eight per cent of executives rank interest rates as the primary influence on their business in the quarter ahead, an increase of 22% since December. This increases to 64% for retail executives.
Lower fuel prices have also had an impact on Australian firms. Only 14% of executives anticipate that fuel prices will have the most significant influence on their operations in the June quarter, a decrease of 19% since December. Meanwhile 14% of firms rank wages growth as their primary concern, a decrease of 2% since December.
According to Dr Duncan Ironmonger, Dun & Bradstreet's economic consultant, the latest ABS National Accounts show the Australian economy has now had three quarters of below average growth, with the December quarter the first in negative territory.
"The positive message from last week¡¦s Reserve Bank decision to leave interest rates on hold is that, although there is room for more cuts, the Bank has done enough for the moment. The dramatic cut of 400 basis points in official rates will continue to have positive effects on consumer spending and housing construction over the months ahead," said Dr Ironmonger.
"Accordingly the Bank sees Australian growth picking up again by the end of 2009. In addition, the Government's second stimulus package next month will boost household spending and further stimulus will follow from the subsequent boost to public infrastructure spending."
The D&B index for expected sales is down 9 points to -48, with 9% of executives expecting an increase in sales and 57% expecting a decrease. The profits index is down 10 points to -57, with 8% of executives expecting profits to rise and 65% expecting a fall.
Employment expectations are down 11 points an index of -25, with 2% of executives expecting an increase in staff and 27% expecting a reduction. Capital investment expectations are down three points to an index of minus ten, with 2% of executives expecting an increase and 12% expecting to cut spending. Inventories expectations are down four points an index of -17.
The selling prices index is down 4 points to an index of 71, with 74% of firms expecting to raise prices and 3% expecting to decrease them.
For further information, or to arrange an interview, please contact:
Damian Karmelich
D&B Director - Marketing & Corporate Affairs
(03) 9828 3233
About the Survey
D&B Australasia conducts latest Business Expectations Surveys every month. Each quarter over 1,200 business owners and senior executives representing major industry sectors across Australia are asked if they expect increases, decreases or no changes in their upcoming quarterly Sales, Profits, Employment, Capital Investment, Inventories and Selling Prices. Since its introduction in Australia in 1988, the survey has proven to be a highly reliable measure of economic performance.
Note: The index figures used in the survey represent the net percentage of survey respondents expecting higher sales, profits, etc., compared with the same quarter of the previous year. The indices are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases.
About D&B
D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.
Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.
Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.
Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.
