Retailers expect Christmas boom

 

shopping, trolley, christmas, gift, decorationsRetailers’ hopes of a good Christmas have driven the number of companies expecting profit growth in the coming months to a 10 year high.

Of the 800 businesses surveyed by researcher, Dun & Bradstreet, 40 per cent expect their profit in the final three months of 2014 to be higher than in the same period a year ago.

Just 11 per cent expect a fall.

That has sent Dun & Bradstreet’s profit expectations index to its highest level in a decade.

Retailers were the most optimistic of those businesses, indicating they are confident consumers will spend big this Christmas.

More businesses also expect to hire staff and increase investment, and Dun & Bradstreet’s economic adviser, Stephen Koukoulas, said rising confidence could boost the economy.

“Not only are expected sales at an 11 year high, a sign of buoyant activity, but expected profits are at a level well above the long run average,” Koukoulas said.

“In the past, firms have only held this level of optimism when the underlying economic conditions were strong.

“D&B’s data suggest that the economy is poised to run at, or even above, trend levels in the second half of 2014, with expected employment and capital expenditure also well above the long run average.”

Even better for businesses, the survey showed an increase in the number expecting prices to moderate, which would mean less pressure on the central bank to lift interest rates.

“A low inflation climate will be vital for the Reserve Bank of Australia to keep its interest rate settings on hold,” Koukoulas said.

Businesses in the retail, services, finance and real estate sectors are the most optimistic about the coming three months, while there was a drop in the number of companies in the manufacturing, construction, transport, and utilities sectors forecasting profit growth.

Growing business confidence was backed by improving conditions in the second quarter of 2014, Dun & Bradstreet said, with profits higher among those businesses surveyed.

AAP

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