5 December 2005
Christmas cheer fizzles in New Year
The latest D&B National Business Expectations Survey shows...
Outlook for March quarter 2006
- First negative sales outlook since 1991
- On balance, a net 20% of executives see pre-Christmas spending to have a small positive impact on their business but less than in 2004
- Eighty per cent of executives expect high oil prices to have a negative impact on their business
- Continued weak employment growth outlook
Actual for September quarter 2005
- Growth in sales and profits again negative - not seen since 1992
Media Release
Recent hopes of a positive start to New Year trading have faded with business expectations for the March quarter 2006 deteriorating.
The latest D&B Business Expectations Survey shows that while many businesses expect a pre-Christmas bump in spending, they do not expect this to continue into the New Year.
The Survey also shows expectations are now worse than any time since 1991.
The November survey, tracking expectations for the forthcoming March quarter, shows a small fall in business expectations for growth in both sales and profits with the prospect of ongoing high oil prices still a major concern for Australian business.
Eighty per cent of executives expect a negative impact on their business if oil prices remain high. This is the same as in September but higher than 75% in October, 66% in August and 56% in June and July.
In the latest survey more executives (32%) think pre-Christmas spending will have a positive impact on their business - up from 29% in October and 22% in September. However, comparing the impact of this spending in 2005 with 2004, only 14% see this to be more positive in 2005; 21% see it to be more negative. The majority (63%) see no difference between the years.
The outlook for growth in sales in March quarter 2006 is down four points to minus two, the first negative index since 1991. Actual growth in sales over the three quarters to September 2005 has also been negative.
D&B Australasia CEO Christine Christian said while retailers were guardedly optimistic about Christmas trading, their hopes for improved trading conditions in the New Year were now fading.
"The latest D&B survey shows business hopes for a stronger first quarter in 2006 have dropped off," Ms Christian said.
"Last month's survey showed businesses were remaining cautiously upbeat about the economy, but it seems that optimism is wavering.
"Recent retail figures indicated consumer confidence had bounced back in some areas such as food and hospitality, but not in discretionary spending.
"This seems to indicate that consumers are nervous and while petrol prices have moderated, there hasn't been much of a bounce in consumer spending.
"Also constraining factors such as household debt and falling house prices remain, so I think we're unlikely to see the Reserve Bank lift interest rates for a few more months."
D&B Economic Consultant, Dr Duncan Ironmonger, said the D&B survey showed that retailers had experienced a particularly tough nine months to September.
"They see further negative growth in sales and profits for both December and March quarters," Dr Ironmonger said.
"Wholesalers and durables manufacturers also have a negative growth outlook, so the only bright spot is for non-durables manufacturers who have net indexes of 6% for sales and 5% for profits in March quarter 2006.
"The apparent sharp recovery for retailing seen in the October survey has been dissolved by the November survey responses."
The D&B index for expected sales is down four points to minus two, with 32% of executives expecting an increase in sales and 34% expecting a decrease. The profits index is down by two points to minus one, with 32% of executives expecting profits to rise and 33% expecting a fall.
Employment expectations are up one point to an index of zero, with 11% expecting an increase in staff, and 11% expecting a reduction. Capital investment expectations are unchanged at an index of one, with 5% expecting an increase and 4% expecting to cut spending. Inventories expectations are unchanged at an index of zero.
The selling prices index is up nine points to an index of 27, with 36% of firms now expecting to raise prices and 9% expecting to decrease prices.
For further information, or to arrange an interview, please contact:
Danielle Woods
D&B PR Manager Australia & New Zealand
(02) 8270 2926
Dr Duncan Ironmonger
D&B Economic Consultant
(03) 8344 2131
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.
