9 January 2006
Oil prices & cash flow are core business issues for 2006
Download the Jan-06 detailed survey's results.pdf (280KB)
The latest D&B National Business Expectations Survey shows...
Outlook for 2006 calendar year
- Fuel prices and cash flow dominate business thinking for the 2006 calendar year - wages & salary growth and interest rates are also a core focus
Outlook for March quarter 2006
- Continued poor sales outlook
- Ongoing weak employment outlook
- Eighty per cent of executives still expect a negative impact on their business if oil prices remain high
Actual for September quarter 2005
- Minimal positive growth in sales and employment after negative results in June quarter - the first since 1992
Media Release
The impact of fuel prices and the management of cash flow have been identified as two of the most critical issues for Australian businesses over the 2006 calendar year, according to the latest D&B Business Expectations Survey.
And recent hopes of a positive start to New Year trading have faded with business expectations for the March quarter 2006 remaining low.
The latest D&B Business Expectations Survey shows that while executives expected a small growth in sales in the December quarter, on balance they expect no growth in the March quarter. These continue to be the lowest sales expectations since 1991.
The survey conducted over the Christmas period, focusing on the forthcoming March quarter, shows a small improvement in all categories from the October and November surveys.
With regard to fuel prices, 80% of executives expect a negative impact on their business if oil prices remain high. This is the same as in September and November but higher than 75% in October, 66% in August and 56% in June and July.
The outlook for growth in sales in the March quarter 2006 is down two points to zero, the lowest index since 1991. Actual growth in sales in the year to September 2005 was slightly positive after two quarters of negative growth,
Looking to the year ahead, more than half (59%) of business executives identify cash flow as an internal issue requiring increased attention. Twenty per cent identify debt collection, nine per cent staff training and four per cent receipts management as requiring more attention in 2006.
External issues that are expected to impact businesses other than fuel prices are wages and salary growth and interest rates. Just over 2% of businesses think the federal government's industrial relations changes will influence operations throughout 2006.
D&B Australasia CEO Christine Christian believes that the survey suggests Australian businesses will be focusing in 2006 on the issues they can directly control.
"While fuel prices remain a major concern, this first survey for 2006 shows that businesses are seeking to focus their attention on the issues they can directly affect in order to bring about stronger business outcomes", said Ms Christian.
"These are issues such as cash flow, debt management and staff training.
"Issues such as cash flow and debt management are particularly important following the Christmas and New Year period which often interrupts business to business payments."
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.
"There is a brighter outlook for wholesalers and durables manufacturers with the latest survey converting the interim sales and profits indexes for March quarter into positive final indexes for the quarter. Non-durables manufacturers now have final March quarter 2006 net indexes of 4% for sales and 2% for profits - lower than the interim readings.
"Overall, although forecasts show real economic growth in 2006 is likely to be about 3.0 per cent, business executives are expecting a slow start to the year," Dr Ironmonger said.
The D&B index for expected sales is down two points to zero, with 32% of executives expecting an increase in sales and 32% expecting a decrease. The profits index is unchanged at one, with 32% of executives expecting profits to rise and 31% expecting a fall.
Employment expectations are up one point to an index of zero, with 12% expecting an increase in staff, and 12% expecting a reduction. Capital investment expectations are up two points an index of three, with 7% expecting an increase and 4% expecting to cut spending. Inventories expectations are unchanged at an index of zero.
The selling prices index is up six points to an index of 24, with 35% of firms now expecting to raise prices and 11% 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.
