Businesses are entering 2012 with a sense of cautious optimism, with the latest Dun & Bradstreet business expectations survey showing an improvement in sales and profit expectations, although both are much weaker than at the start of 2011.
The survey shows sales expectations for the March quarter rose five points to 16 index points. It is the highest reading in a year, but still 15 points below the start of 2011, when executives and managers were clearly overly optimistic.
Profit expectations have also increased, rising three points to eight index points – above the 10-year average of the survey by 20 points below expectations at the same time last year.
The employment and capital investment indices have also risen, with the latter jumping sharply over the last six months after big declines.
Fuelling the optimism is some better-than-expected results in the September quarter of 2011, when 36% of firms reported an increase in sales (compared with 22% who saw sales fall) and 27% reported a rise in profit (compare with 23% who saw profit fall).
The survey found that in the September quarter 14% of firms increased staff numbers (compared to 9% that cut staff) while 16% of firms increased investment, compared with 9% that cut spending.
The outlook for 2012 was tempered by some key sectors – 50% of non-durables manufacturers, retailers and wholesalers cited slowing demand as the most significant barrier for the business in the year ahead.
D&B chief Christine Christian says the global economy appears to be having a major drag on the local outlook.
“As the world contemplates a second recession, it is inevitable that local businesses will begin to question how this may affect their business in the coming year,” she said in a statement.
“As insulated as we have been so far from the turmoil in overseas markets, a second global recession will undoubtedly have consequences for sectors of the economy.”
Unsurprisingly, specific research on retailers revealed 56% expect online sellers to impact bricks and mortar stores. In a sign that cost pressures are also building for retailers, 36% expressed concerns about rising wages.
Over the whole survey, businesses expected interest rates, wage growth and fuel prices to be the three biggest influences on operations in the March quarter.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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