Business indicators suggest better times ahead

The Business Actuals Index has risen for the third consecutive quarter – notably the sales, employment and capital investment business indicators

Australian companies remain pessimistic about their bottom line for 2016, but the latest business indicators suggest there may be a silver lining to their gloomy outlook.

A ‘persistent lack of conviction’ pervades most sectors with businesses expecting lower sales, profits and sales in the June quarter than the March quarter of 2016, according to the latest Dun & Bradstreet business expectations survey.

However, lifts in expectations tend to follow official economic announcements and Economic advisor to Dun & Bradstreet Stephen Koukoulas is optimistic about the figures in an accompanying survey.

The Business Actuals Index saw its third consecutive increase over the December quarter of 2015, up 1.9 points from 11.0 points to 12.9 points.

‘In terms of the actual performance of the economy, businesses noted a lift in all indicators other than profits, which only edged a fraction lower,’ Mr Koukoulas said in a statement.

‘Most impressive were increases in actual sales, employment and capital investment.’

‘These business indicators bode well for the December quarter GDP results which will be published next month.’

However, Head of Group Development at Dun & Bradstreet Adam Siddique was concerned about an unexpected collapse in retail industry expectations despite a favourable labour market, positive consumer sentiment and a very strong Christmas trading period.

‘We’ll be keenly monitoring this space in the months ahead given the importance of the retail sector to the broader economy,’ he added.

The survey results are based on responses from 400 business executives taken each month.