Australian businesses are expecting an earnings boost during the Christmas period, with the outlook for year-end profits jumping to their highest levels since the beginning of the year as confidence returns following the election.
After a year of weak and falling expectations, the business outlook for the final quarter of 2013 has improved for the key areas of sales and earnings, with the profits outlook noticeably stronger than in Q4 2012 and Q4 2011.
According to Dun & Bradstreet’s National Business Expectations Survey, 28 per cent of businesses expect to increase their profits across the next three months, compared to the seven per cent which forecast a reduction. These responses, taken from the manufacturing; wholesale; retail; services; construction; finance, insurance and real estate; and transportation, communications and utilities sectors; have lifted the survey’s profits expectation index to 21.1 points, up from 13.2 points in the previous quarter.
Business expectations traditionally rise during the fourth quarter of the year as companies look for consumers to increase their spending, particularly in the lead-up to Christmas. The seasonal boost has been supported this year by the conclusion of the federal election, with D&B finding that 65 per cent of businesses are more confident about future business conditions following the change in government.
“The positive momentum in business expectations that was starting to show up in recent months has lifted appreciably in the latest survey and points to a pick-up in economic activity as 2013 draws to a close,” said Stephen Koukoulas, Economic Adviser to Dun & Bradstreet.
“Low interest rates and the weaker Australian dollar are now showing up quite directly in activity and the mood of the business sector. “Dun & Bradstreet’s Business Expectations Survey has been a solid leading indicator for the economy in recent years. The improvement in conditions is noteworthy for the RBA as it views the recent house price gains with some trepidation. “The positive signs for the economy from the survey all but close the door on talk of a further interest rate cut from the RBA,” Mr Koukoulas added.
To read the full story click on this link: DB Business Expectations Survey – December quarter 2013 – final indices