Australian business confidence on the up

Australian business confidence is returning, with a strong end to the year anticipated by company executives, according to new research.

The Dun & Bradstreet National Business Expectations Survey found that its sales expectations index had surged by 15 points to 33 for the December quarter.

The inventories index, up five to 12 points, is at its highest level in six years, while there are similar increases in capital investment and selling price expectations.

In the June quarter, capital investment grew for the fifth consecutive quarter to stand at its highest level in seven years. A third of firms increased sales compared with the same quarter last year and 14% of companies increased staff numbers.

Looking ahead, 29% of businesses view wages growth to be the primary influence on operations, up 4% in a month. Access to credit is cited by 15% of companies as the most important influence, up 7% in two months, although focus on interest rates and fuel prices dropped off.

Overall, 34% of firms expect profits to increase in the coming quarter, with 12% anticipating a decrease. Employment levels are steady, with 11% expecting to hire staff, with 6% foreseeing a staff reduction.

Christine Christian, CEO of Dun & Bradstreet, says: “The turnaround in the expectations of Australia’s executives since the previous quarter has been quite remarkable.”

“The latest survey shows that five key indicators of business strength have improved relatively significantly, with certain indexes rising to the highest level in six and seven years. The sales index is particularly strong and it is driving the increased level of expectations in profits, inventories and capital investment.”

“We have also seen some quite substantial improvements in the actual index since the depths of the crisis, with the improvements experienced during the June quarter playing into confidence levels as we head towards the end of the year.”

“The one area where firms remain cautious is employment. However, the intended level of hiring activity for the December quarter is still positive.”