The results from Dun & Bradstreet’s April Business Expectations Survey have highlighted another drop in expectations, with businesses maintaining gloomy forecasts for the three-month period to 30 September 2016. Meanwhile, the Actuals index has also experienced a sharp fall, with the figure dropping to its lowest point since June 2013.
Dun & Bradstreet’s Business Expectations Index, the average of the survey’s measures of Sales, Profits, Employment and Capital Investment, has fallen to 9.6 points for the third quarter of 2016, down from 12.7 points for Q2 2016 and 17.6 points in Q3 2015.
The Actuals index plummeted to 5.0 points, compared with 12.7 points last quarter, bringing an end to three consecutive quarters of growth.
According to Stephen Koukoulas, Economic Adviser to Dun & Bradstreet: “Business expectations took a further step lower in April as did the reporting of ‘actual’ activity. Most disconcerting was a slump in both actual and expected profits, which have dipped to multi-year lows.”
“Business optimism has clearly soured in the past few months to the point where sales, expected selling prices and employment have also slowed markedly. It is not clear what is driving this less optimistic tone, but a lack of economic policy resolve from the government, and the inevitable uncertainty that will accompany what will be a very long election campaign, are no doubt weighing on confidence,” Mr Koukoulas added.
Across the board, nearly every index experienced a decline, with the exception of Capital Investment Expectations, which increased by 1.6 points. The Actual Sales and Actual Employment indices were particularly hard-hit, with the former falling from 22.4 points to 12.5, while the latter dropped from 8.5 points to 1.1 points. Meanwhile, both Profits indices also dived, with Expectations falling from 10.2 points to 3.6 points, while the Actuals index collapsed from 8.0 points to -3.0 points.
The Retail sector has fared poorly, with Expectations plunging to -0.7 points, a dramatic fall from its Q4 2015 high of 29.9 points. Retail’s Actuals index also fell to a negative figure, dropping from 15.5 points to -0.3 points. These declines were driven heavily by a sharp fall in the sector’s Employment indices, with Expectations falling from 4.7 points to -13.4 points, and Actuals dropping from 9.7 points to -8.3 points.
The Transport, Communication & Utilities sector also experienced sharp declines, with Expectations falling from 12.6 points to 2.4 points, while its Actuals index dropped from 9.1 points to 0.0 points. Similarly, the Construction sector faced a 2.7-point decline in Expectations to 8.6 points, while its Actuals index crashed from 10.9 points to -3.9 points.
The Finance, Insurance and Real Estate sector had some positive news, with its Expectations index increasing from 17.1 points to 22.5 points; however, its Actuals figure dropped slightly, from 16.7 points to 16.4 points. Similarly, the Services sector saw a 1.5 point increase in Expectations to 11.8 points, although the sector’s Actuals index collapsed from 15.0 points to 0.5 points.
“The big test for the economy will be coming in the next month with the release of the official private capital expenditure and GDP data and for the March quarter. If these turn out to be weaker than expected, the less than favourable business expectations in the Dun & Bradstreet survey could quickly work to undermine confidence as the election draws near,” Mr Koukoulas noted.