Businesses looking to 'wait and see' as optimism falls: Business Expectations Survey
The National Business Expectations Survey published today by credit reporting firm Dun & Bradstreet reveals a cautious and conservative mindset for businesses and consumers alike.
Dun & Bradstreet's director of corporate affairs, Danielle Woods, told SmartCompany the survey shows the optimism businesses were showing coming into 2013 has come down slightly.
"Five of the six key indicators have fallen since the previous quarter. The only index that went up, and only marginally — by one point — was employment," she says.
While this doesn't sound like a ringing endorsement for the economy, all of the indicators are still in positive territory, meaning businesses expect an increase in these factors compared to the December quarter.
However, employment, capital investment and selling prices are all down close to zero.
"If these indicators continue their slide they will move into negative territory pretty quickly," says Woods.
Woods believes lower selling prices can be explained by more than just the all-powerful exchange rate reducing import prices. Many businesses will look to drop prices just to lure tight-wallet customers through their doors.
"The strong Australian dollar lowers costs, and these are passed on to the consumer, reducing selling prices," she says.
"This is a good thing. But there is also a trend now where to get people into stores, they must lower prices."
The survey shows petrol prices currently loom as the major anxiety for businesses overall, with 39% of businesses naming it as their biggest factor looking forward, a rise in 10% from the last quarter.
The concern for interest rates has dropped by an equal amount, down to 23%.
"Petrol price always have a generally high number attached to it and we haven't seen these fall away in a long time," Woods says.
"For business where petrol is involved, it's always going to be a big factor. With the interest rates becoming less of a concern, businesses will worry about something else."
There are some other interesting implications that stem from the low interest rates. Woods believes despite the low interest rates, people are still not willing to take on debt.
"They're using the lower rates to pay down the debt, not take on more," she says.
"They're also not investing. Capital investment leads to greater business productivity, but they're not prepared to invest in capital at the moment."
This lack of investment could be an extension of the conservative approach we're seeing from consumers, who are also less willing to take on debt.
"Consumers are trending towards debit cards instead of credit cards," says Woods.
The overall feeling for business owners coming into 2013 seems all a bit careful.
"I think they're just not prepared yet to see everything as being rosy," concludes Woods. "They are still a bit wait and see. They need a few strong actuals for things to improve. They still see challenges on the horizon."
Dun & Bradstreet surveyed 1,200 businesses from across Australia. These were from the four sectors of retail, wholesale, manufacturing-durables and manufacturing-non-durables. The six business indicators analysed are sales, profits, inventory, selling prices, capital investment and employment, with indexes given for each indicator.