Business gloomy about December quarter
- 6th October 2008
BUSINESS executives are gloomy about the prospects for their companies as they expect a slump in sales and profits over the December quarter that may lead to job cuts.
The latest Dun & Bradstreet (D&B) Business Expectations Survey says executives are worried about the tightening credit market, high petrol prices, decline in the value of the Australian dollar, and wages growth.
"Australia's business executives are expecting a sombre lead into Christmas as movements in the Aussie dollar, high fuel prices, continued inflationary pressures and declining consumer spending hurt their sales and profits prospects," D&B said.
"The December quarter is expected to bring a steep decline in sales, profits, employment growth and capital investment, with all of these indices in negative territory for the second consecutive quarter."
Forty-four per cent of firms surveyed expect sales to fall, and 49 per cent expect profits to drop.
The employment index fell to its lowest level in 17 years, with 23 per cent of executives expecting to have fewer staff in the quarter ahead compared to one year ago.
Four in 10 businesses said interest rates would be their primary issue in the quarter ahead.
Despite recent falls in petrol prices, 34 per cent of businesses said fuel prices would have the most impact on operations.
Wages growth was the major concern for 22 per cent of firms.
Sixty-nine per cent of firms said a tightening credit market would have a negative impact on operations.
Sixty-six per cent of businesses were expecting to have to put up selling prices in the coming quarter, which signalled that inflationary pressure would continue in the short term.
"Australian businesses are undoubtedly facing some very real challenges," D&B Chief Executive Christine Christian said.
"Profit margins are being eroded by a slowing economy and escalating funding and goods costs, while the decline in the Aussie dollar is forcing businesses to pay more for their imports.
"These factors have hit business confidence hard, causing expectations for the December quarter to drop to levels not seen since the 1990s."
Nonetheless, Ms Christian said, Australia's outlook was stable compared to other countries, and a cut in interest rates should have a positive effect on spending and investment.
- © AAP
