6 February 2006
Business confidence up but caution remains
Download the Feb-06 detailed survey's results.pdf (500KB)
The latest D&B National Business Expectations Survey shows...
Outlook for 2006 calendar year
- Fuel prices and cash flow remain a concern for business in the 2006 calendar year
- Almost one in five executives expect industrial relations reforms to assist growth of their business
Outlook for June quarter 2006
- Best sales outlook in four quarters
- Promising recovery in profits outlook
- Eighty one per cent of executives expect a negative impact on their business if oil prices remain high
Actual for December quarter 2005
- Solid recovery for growth in sales and profits after poor results in first nine months of 2005
Media Release
A brighter outlook for Australian business is emerging with expectations of a recovery in the June quarter 2006.
The latest D&B Business Expectations Survey shows business confidence is improving with expectations of a second quarter pick-up in the rate of growth in sales and profits - according to preliminary results from the January survey.
The latest D&B Business Expectations Survey shows the best sales and profits outlook in four quarters and the best capital investment growth since December quarter 2004.
The survey conducted in January, focusing on the forthcoming June quarter, shows a solid improvement in all categories except inventories. Sales expectations are up by 12 points and profits by nine.
With regard to fuel prices, 81% of executives now expect a negative impact on their business if oil prices remain high. This is a point higher than in November and December. In June and July only 56% expected a negative impact.
Looking to the year ahead, two thirds of business executives identify cash flow as an internal issue requiring increased attention. Also, 16% identify debt collection, 9% staff training and 4% receipts management as requiring greater focus in 2006.
Wages, salary growth and interest rates remain core external issues, along with fuel prices.
D&B Australasia CEO Christine Christian says the survey suggests that business confidence is finally picking up after challenging times in 2005.
"Businesses are remaining vigilant about issues such as cash flow and debt management, however, they are now far more optimistic about the year head," Ms Christian said.
"Solid improvements in sales and profits outlooks and capital investment growth are strong indicators of increasing confidence.
"While fuel prices continue to cause concern, business is looking toward growth. This is reinforced by the surge in business borrowing, the largest since the 1980s.
"Growth expectations as a result of industrial relations reforms remain static with about one in five expecting some improvement."
D&B Economic Consultant, Dr Duncan Ironmonger, said the D&B survey showed retailers were at last expecting to recover from an extremely worrying year in 2005. After five quarters of negative growth in both sales and profits, they now expect a modest recovery in June quarter 2006.
"However, retailers with quite low expectations for increasing selling prices, are still expecting to cut both numbers of employees and inventories in the quarter ahead," Dr Ironmonger said.
"There is a much brighter outlook for non-durables manufacturers with the preliminary indexes from the January survey showing high expectations for growth in sales and profits. Non-durables manufacturers now have final December quarter 2005 net indexes of 31% for sales and 24% for profits - well above their expectations.
"Overall, after a slow start to the year, business executives expect a much better second quarter. They are supporting this confidence in growth with a much stronger outlook for capital investment."
The D&B index for expected sales is up 12 points to 12, with 36% of executives expecting an increase in sales and 24% expecting a decrease. The profits index is up nine points to 10, with 35% of executives expecting profits to rise and 25% expecting a fall.
Employment expectations are up two points to an index of two, with 15% expecting an increase in staff, and 13% expecting a reduction. Capital investment expectations are up three points to an index of six, with 9% expecting an increase and 3% expecting to cut spending. Inventories expectations are down a point to an index of minus one.
The selling prices index is up two points to an index of 26, with 36% of firms now expecting to raise prices and 10% 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.
