7 May 2007
New financial year brings signs of improvement for business
The latest D&B National Business Expectations Survey shows...
Outlook for September quarter 2007
- Expectations for growth in sales and capital investment have taken a strong upswing
- Growth in profits, employment and inventories is positive for the first time in five quarters
- Expectations for selling prices have dropped 12% from the previous survey, with just half of firms expecting prices to be higher than the corresponding quarter in 2006
Federal Budget
- Almost half (47%) of executives indicated that reducing company tax rates would have a significant positive impact on their business
Drought
- The drought has had a negative impact on more than one third (36%) of firms surveyed, with 17% categorising the impact as very negative
Interest Rates
- More than one third (36%) of firms surveyed have been negatively impacted by the one quarter per cent increases in interest rates in May, August and November 2006, up from 30% in March and 22% in February
Petrol Prices and Wages Growth
- The influence of fuel prices on business operations continues to be significant despite a decrease of 21% since January (now at 43%)
- The influence of wages and salaries growth has increased by 23% since January, with 42% of business executives now indicating it the most important influence on their business in 2007
Actual for March quarter 2007
- Capital investment growth surged to its highest level in four years
- The quarter saw a strong improvement in growth of sales and inventories
- Selling price rises were well below expectations
- Profits growth remained in negative territory
Download the May-07 detailed survey's results.pdf (817KB)
Media Release
The outlook for business in the new financial year is positive, with substantial improvements expected across a number of key indicators.
According to the results from the April Dun & Bradstreet (D&B) Business Expectations Survey, inflationary pressure and petrol price concerns are easing and the September quarter brings expectations of a strong upsurge for growth in sales and capital expenditure. Additionally, growth in profits, employment and inventories has entered positive territory for the first time in five quarters.
According to Christine Christian, D&B Australasia CEO, the Reserve Bank of Australia's (RBA's) decision to leave interest rates unchanged is an added bonus for business amidst positive expectations for the new financial year.
"The factors that have been putting pressure on business, such as inflation and petrol prices, are beginning to ease and we are seeing a substantial improvement in executive expectations for the coming quarter.
"The RBA's decision to keep the benchmark rate unchanged at 6.25% for the fifth straight time will be welcomed by executives however; businesses must be prepared for the prospect of a rate rise later this year, possibly some time after the federal election," said Ms Christian.
In a sign that inflationary pressure is declining, only 50% of executives anticipate higher selling prices in the September quarter than a year earlier, with nine percent expecting to decrease prices. It is also anticipated that the quarter ahead will bring an improvement in the growth of sales and profits.
Expectations for capital investment have taken a strong upswing, with 24% of executives expecting an increase in spending in this area.
Executive concerns regarding petrol prices are beginning to ease. Down 21% since January, 43% of executives now rate fuel prices as the most significant influence on business operations in 2007. However, concern over growth in salaries and wages has risen sharply, up 14% since the previous survey to 42%. Interest rate concerns have also increased and are now considered a significant concern by 11% of executives.
The number of executives indicating that the drought has had a negative impact on business operations has reached its highest level in four months, with more than one third (36%) of firms surveyed categorising the impact as negative and 17% as very negative.
Looking to this month's Federal Budget, almost half (47%) of executives surveyed indicated that a reduction in company tax rates would have a significant positive impact on business operations. This was followed by measures to increase public infrastructure spending (22%), stimulate business investment (21%), reduce personal income tax rates (5%) and assist business export growth (<3%).
According to Dr Duncan Ironmonger, Dun & Bradstreet's economic consultant, the reprieve in interest rates will positively add to the substantial improvement that is expected in business conditions in the new financial year.
"More than half of executives in the latest survey indicated that a quarter percent increase in interest rates in April would have negatively impacted their business. The decision by the RBA to keep rates steady in April and again in May will assist businesses with the turn around we are expecting to see in the new financial year.
"Looking further ahead, I'd expect to see the flow on effects of the Federal Budget begin to impact the business environment as we head into the New Year," said Dr Ironmonger.
The D&B index for expected sales is up 13 points to 15, with 38% of executives expecting an increase in sales and 23% expecting a decrease. The profits index is up 12 points to eight, with 33% of executives expecting profits to rise and 25% expecting a fall.
Employment expectations are up 10 points to an index of eight, with 23% expecting an increase in staff, and 15% expecting a reduction. Capital investment expectations are up 19 points to an index of 21, with 24% expecting an increase and 3% expecting to cut spending. Inventories expectations are up eight points to an index of four.
The selling prices index is down 17 points to an index of 41, with 50% 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
Media
Hill & Knowlton
(02) 9286 1258
Christine Christian
CEO
D&B Australasia
(03) 9828 3146
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.
