Expectations for sales, profits, selling prices, investment and employment for 2014 are at their highest level in 12 months, according to latest Dun & Bradstreet Business Expectations Survey for the March quarter 2014.
The survey found 68% of Australian businesses are feeling positive about growth compared to 2013. Unlike last year where uncertainty around the federal election was perceived as an impediment to business stability, 35% of businesses indicated that they could see “no major barrier” to growth this year.
To facilitate expansion plans, the survey found 18% of businesses plan to access new finance during the first quarter, which is the highest figure since late 2011. Thirteen per cent of businesses intend to spend on capital in the early part of this year, however, 5% will decrease spend.
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Businesses expect sales to improve this year, with the sales index increasing to 27.5 points, which is the highest result in 12 months.
The survey also found the profits index has reached 25 points, its highest level since the start of 2011.
Hiring intentions are up for many businesses, with 15% declaring they will take on more staff this year. However, 7% intend to reduce the size of their teams.
In the September quarter of 2013, actual employment levels increased from -8.3points to 1.8 points. Dun & Bradstreet reported this was the first time the index moved out of negative territory for five consecutive quarters.
In bad news for consumers, almost one quarter, 24%, of businesses intend to raise the prices of their products and services in coming months.
Despite the positive outlook, the issue of cash flow remained a sticking point, with 32% identifying it is as the most likely issue to impact business.
This sentiment could reflect that 38% of respondents had customers or suppliers become insolvent, or were unable to pay them in 2013.
The level of the dollar was also raised as a potential issue by 17% of respondents, while interest rates were flagged by 12% of respondents.
Dun & Bradstreet’s director of corporate affairs, Danielle Woods, said the survey results show that business is “finding its feet following a 2013 of weak and irregular business conditions”.
“With companies looking ahead with optimism, forecasting strong sales and profits, and most recently showing a willingness and capacity to borrow money to grow their operations, the signs are positive for the new year,” she said.
Economic adviser to Dun & Bradstreet, Stephen Koukoulas, said the results signal “stronger economic growth” in the months ahead.
“If there is one cloud on the horizon, it is the expected lift in selling prices,” he said.
“A stronger economy is no doubt allowing firms to move their prices higher, but we are also seeing the impact on inflation from the recent weakness of the Australian dollar.”
“This is likely to cause the Reserve Bank some concern, and is a fundamental factor why we are likely to see a series of interest rate rises during 2014,” he said.
The survey results reflect the findings of the Sensis Business Directions Index released in December 2013, which showed business confidence was at its highest levels since 1993.