Business confidence has surged heading into the final quarter of 2016, with expectations for sales, profits and employment lifting according to the latest Dun & Bradstreet Business Expectations Survey.
The survey reveals profit expectations posted the biggest increase – up from 9.4 points in Q3 to 19.5 points in Q4. Sales expectations also posted a large jump, from 21.4 points to 30.7 points, with employment expectations lifting from 8.2 points to 12.2 points.
Selling prices recorded a modest increase (from 9.2 points to 10.4 points), while plans for capital investment fell 1.6 points to 8.7.
The overall Business Expectations Index, which is the average of the survey’s measures of Sales, Profits, Employment and Capital Investment, jumped by 17.8 points for Q4 2016, up from 12.3 points for Q3.
Stephen Koukoulas, economic adviser to Dun & Bradstreet, says while capital expenditure remains problematic, the results point to a period of solid economic expansion through to the end of 2016.
“Encouragingly, expected sales, profits and employment have lifted further, and all well above their long-run averages.”
Dun & Bradstreet highlight the increased optimism for the December quarter signals a rebound in business sentiment following three successive declines in the Business Expectations Index from the March to September quarters.
“Altogether, the business expectations are positive and suggest the economy continues to transition well from the end of the mining boom,” Koukoulas adds.
Consumer confidence was revealed to be the top issue expected to influence operations in the December quarter (41.5%) followed by cash flow (12.9%) and the level of the Australian dollar (8.8%).
In terms of growth, the good news is 54.2% of businesses are more optimistic about growth in the next 12 months compared to 2015, while 34.1% are less optimistic and 11.8% are undecided.
The biggest barriers to growth in the year ahead included weak demand for products and services (for 15.4% of businesses) followed by utilities and operational costs (13.2%).
Almost three-quarters of respondents (73.4%) do not intend to seek credit to fund growth, compared to 20.7% that anticipate doing so and 5.9% that are undecided.
Dun & Bradstreet also highlights actual results reported for the June quarter, with employment, sales and actual profits lifting:
- Employment grew from 2.3 points in the previous quarter to 5.5 points
- Sales activity increased from 12.7 points to 14.3 points
- Profits jumped from 1.1 points to 8.8 points
- Capital investment activity dell from 8.2 points to 7.3 points
- Selling prices dropped from 8.4 points to 7.5 points.