The outlook for sales has risen to its highest level since 2003, with retailers also expecting a recovery from the recent slump in sales, according to the latest Dun & Bradstreet’s monthly Business Expectations Survey.
According to the survey, 46 per cent of businesses expect higher sales in the December quarter, while nine per cent anticipate fewer sales.
Retailers have shrugged off a recent run of poor activity recorded by the ABS to lift their sales expectations index to 32.9 points, up from 9.7 points.
The services sector has seen a particularly positive outlook, of which 63 per cent expect increased selling during Q4 2014 while 11 per cent are anticipating a decline.
This response has seen the services industry sales index jump to 52.5 points, up from just four points last year.
The transportation, utilities, and construction sector has also returned a healthy response for sales in the fourth quarter with an index of 45.4 points, up from 8.1 points in Q4 2013.
Although ahead of last year’s figures, on a quarterly basis manufacturers, wholesalers, and businesses in finance, insurance, and real estate have lowered their outlook for sales activity.
The upbeat response to Dun & Bradstreet’s monthly Business Expectations Survey has taken the sales index to 36.6 points, well above its 10 year average of 13.08 points and a breakout from the relatively flat movements in the survey’s other measures of profits, employment, capital investment, and selling price expectations.
“These findings on December quarter expectations have continued the generally positive trend we’ve been seeing since the end of 2013,” said Gareth Jones, CEO of Dun & Bradstreet.
“While there has been a recent pullback in the profits and capital investment indices, there’s a clear upward trend developing this year and all of the survey’s measures are above their 2013 level.
“The sales outlook is particularly solid through to the end of the year, providing encouragement for those businesses concerned that the Federal Budget had knocked the wind out of consumer confidence and spending,” Jones said.
According to Dun & Bradstreet, two in three businesses are generally more optimistic about increased growth in the months ahead, a level that has been maintained for most of this year.
Confidence at local levels, however, is varied when considered against other parts of the country.
When asked to rate their local conditions compared with other states and territories, businesses in Tasmania were particularly downbeat, with the most common response being ‘very bad’ (39 per cent), while just eight per cent responded with ‘very good’.
Despite the relative strength of the Western Australian economy, the majority of businesses operating in the west consider conditions as ‘average’ when compared to other locations.
Most positive about local conditions are businesses in the ACT, with 38 per cent rating the ACT as ‘good’ and one in four ‘very good’. No respondents considered the local scene as ‘very bad’.
“The surge in expected sales bodes well for economic growth over the latter part of this year, while the continued resilience in the outlook for employment suggests that the pace of job creation will move to a point where the unemployment rate edges lower over the next couple of quarters,” said Stephen Koukoulas, economic advisor to Dun & Bradstreet.
“The dip in expected selling prices indicates that the inflation rate probably peaked in the June quarter and will ease to the middle of the RBA’s two to three per cent target band,” Koukoulas said.
“While expected capital expenditure and profits expectations are broadly flat, they remain well above the level of 2013 and fit with an overall picture of solid, if not spectacular, growth in the economy.”
