Businesses expecting happy Christmas

Australian businesses are expecting a strong Christmas trading period, sparking hopes of a sustained period of economic growth.

 

The Dun & Bradstreet business expectations survey showed that sales expectations for the December quarter have surged, with the index up 16 to 34 points. This means that 49% of firms expect an increase in sales, with just 15% expecting a dip.

 

D&B’s inventories index is its highest in nearly six years years, up 14 to 26 points. There are more modest increases in capital investment, selling prices and employment expectations.

 

Four in 10 of those surveyed anticipate profits to increase over December, with 12% expecting a decrease. Retailers have the highest profit expectations, followed by manufacturers.

 

A quarter of firms don’t see any barrier to their growth, although 19% expected to be hampered by skills shortages and 47% are bracing themselves for slow growth.

 

A further 41% of businesses expect to reduce their debt levels in the next three months, with just 2% set to increase their debt levels.

 

Despite widespread speculation of an interest rate rise today, just 28% expect rates to be the primary influence on their business in December, down 8% on the previous quarter. Wages growth is the biggest consideration for 32% of firms, up 7%.

 

“The confidence of Australian firms has improved substantially over the past 18 months,” says Christine Christian, CEO of D&B.

 

“Executives are now expecting to deliver solid sales and profits growth in the December quarter – they are also anticipating a need to take on new staff and displaying an appetite to invest in their operations. All of these factors bode well for our economy and indicate we will continue to deliver healthy growth in the second half of 2010.”

 

“However, much of this buoyancy is being driven by expectations that the Christmas trading period will deliver its usual influx of buyers, with the sales index particularly strong.”

 

“Although solid December quarter results will undoubtedly assist GDP figures for 2010, growth in these key areas must continue into the New Year if we are to prove resilient to the economic factors impacting other developed nations.”

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