Businesses are taking advantage of the economic recovery and are expecting higher sales and more employment in the next quarter, the latest results of the Dun & Bradstreet National Business Expectations Survey reveals.
But more interest rate rises caused by higher inflationary pressures and wages growth will be the main concerns for the next three months, employers have said.
The survey found sales expectations rose by five points to an index of 33, the highest point in six years, while profits expectations rose eight points to a five-year high of 18.
Capital investment expectations rose to a seven-year high of 15, while expectations for growth in inventories during the next three months are at a five-year high. Additionally, employment expectations have returned to positive territory at an index of nine, while selling price expectations rose by nine points.
D&B director of corporate affairs Damian Karmelich says the numbers speak for themselves in showing Australian businesses are enjoying the recovery.
“Sales expectations and profit expectations are at their highest in years, these figures show that executives continue to be positive about investing in their own businesses, with inventories, which people find quite boring an index, actually showing some important figures here.”
“Expectations for inventories continue to show that after an initial period of restocking, businesses are confident about moving that stock and continuing with their ordering – this is quite unique around the world.”
The uptake in capital investment is a significant move, as several business barometers over the last year have shown the market to be hesitant in this regard. But Karmelich says more businesses are now eager to invest.
But the crisis isn’t over just yet. The figures show 38% of companies believe interest rates will be the major influence on their business during the next quarter and that 37% consider wages growth to be their highest challenge.
“Employment prices are back into positive territory and selling prices are on the rise, which will lead to demand and competition for skilled labour. Obviously this will lead to higher wages as one way of competing in the market, and more wages chasing the same level of goods results in inflation. The RBA is not done with its interest rate rises.”
“From a business perspective, this is good news for some and not so much for others. The challenge is now that while interest rates are returning to more normal levels, SMEs never quite got the cut that households got and it’s more likely to bring extra challenges for them.”
The study also found that 21% of executives report having significantly less access to credit during the last quarter, and 7% said they had less access. Only 19% report having moderate or greater success in obtaining credit, with 51% reporting no change.
Rising business-to-business payment days are also significantly affecting businesses, 40% reporting a negative impact. D&B said its analysts of accounts receivable records show a deterioration in payment terms to 53.9 days.
About 36% of executives plan to reduce current business debt in the next quarter, with 18% to reduce it significantly and 18% more moderately. About 19% expect to increase business debt.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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