Hope for the economy’s long-awaited revival for 2013 is starting to fade as business expectations for the final quarter of the year have fallen flat.
The latest Dun & Bradstreet Business Expectations Survey found that expectations for sales, investment and employment in particular have dropped to low levels.
The sales index slid downwards from 4.5 points to 3.5 points, with the number of business anticipating increased sales activity dropping from 18 per cent in the previous quarter to 11 per cent in Q4.
With just two per cent of businesses planning to increase spending next quarter, the capital investment index has remained in negative territory and relatively unchanged at -1.3 points.
Additionally, with just three per cent of companies intending to hire new staff in the final quarter of the year, the employment index has failed to move into a positive range, sitting at -2.8 points compared -3.3 a quarter earlier.
“The year-end outlook for businesses is not particularly cheery,” said Gareth Jones, CEO of credit information bureau Dun & Bradstreet.
“We are seeing something of a holding pattern develop when it comes to business expectations, with little movement up or down in the survey’s series of forward-looking indices.”
“It’s been a trying year for many companies, with concerns about cash flow, operating costs and weak demand emerging as constant themes. As a consequence we’ve been seeing companies focusing on paying down their debt, managing expenses and focusing on core operations, to the detriment of investment and employment.”
According to Jones, businesses will be hoping the New Year brings new cause of optimism to support the traditional pick-up in consumer spending during the summer months. Necessary to this will the two current significant issues impact Australian businesses: operating costs and cash flow.
The survey found, 45 per cent of businesses view operating costs as their biggest barrier to growth in the year ahead, while 64 per cent expect cash flow will be an issue.
“The general tone for the business sector is subdued with no signs of a broad-based pick up in optimism in the key indicators,” said Stephen Koukoulas, economic adviser to Dun & Bradstreet.
“That said there has been no further deterioration in business expectations over the past few months which offers some hope that the lower Australian dollar and low interest rates are slowly impacting on the real economy.”