Wednesday, 8 January 2014

Business positive about 2014 profit, employment prospects, Business Expectations Survey finds

Australian businesses predicts 2014 to be a good year for growth, expecting that sales, profits, investment and employment will increase to their highest level in 12 months.

Dun and Bradstreet's latest Business Expectations Survey shows capital investment and employment intentions have rebounded from negative territory in the previous quarter to sit above their 10-year average levels.

Dun and Bradstreet's economics adviser, Stephen Koukoulas, says expectations for employment are particularly encouraging and should allay some people's concerns about job security.

"While we're still not quite at the very strong levels for employment and hiring intentions just yet, it's clearly lifted over the last 9-12 months or so," he said.

"And it's suggesting to us anyway that employment will start to lift to a more sustainable pace in the first half of 2014."

The survey also explains a quarter of firms designed to raise the cost of their products and services throughout the first three months of this year 2014, a move that may prompt the Reserve Bank to lift interest rates.

"It would require a global negative shock to cut rates again in our view," Mr Koukoulas said.

"But more likely if the economy is stronger, if we do get a pick-up in selling prices showing up in higher inflation in the next quarter or two, then I think not only do we not have interest rate cuts coming through but the focus of the market will be more on when will the RBA start lifting interest rates and how aggressively will they do it."

According to the survey, optimism among Australian businesses is also on the rise, with two-thirds of firms feeling more positive about growth prospects this year compared to last year.

Employment objectives have recovered from an interpretation of -1.1 in the last quarter to 8.8 in the present quarter, the highest level in three years, at the same time as the outlook for capital spending was back from -0.4 to 7.2.