Australian Business Expectations Survey

Transcription

1 Australian Business Expectations Survey Dun & Bradstreet Q FINAL RESULTS RELEASED 4 OCTOBER 2016

2 Index Business is looking forward to a mostly merry Christmas Australian business attitudes are upbeat as we head into the year-end holiday trading period. According to Dun & Bradstreet s September Business Expectations Survey, companies are anticipating increased sales, profits, employee numbers and selling prices in the December quarter, compared to the September quarter. However, compared to the final quarter of 2015, expectations are lower in all components of the survey. Stephen Koukoulas, Economics Advisor to Dun & Bradstreet, said: The generally positive tone to business expectations has continued, which points to an on-going solid pace of expansion for the economy over the remainder of The upswing for expected sales, profits and employment has been sustained in the most recent survey, aided, it would appear, by the record low interest rate settings and evidence of policy progress from the re-elected Turnbull government. Dun & Bradstreet s Business Expectations Index, the average of the survey s measures of Sales, Profits, Employment and Capital Investment, has jumped 37.1 per cent to 17.0 points for the fourth quarter of 2016, up from 12.4 points for Q3 2016, but down 22.0 per cent from 21.8 points in Q The final Q4 result is 9.1 points above the 10-year average of 7.9 points Business Expectations Index Business Expectations Index Business Actuals Index The Business Expectations Index is an aggregate of the survey s measures of sales, profits employment and investment expectations. Expectations for capital investment remain subdued, which is a concern for the economy given the still unfolding decline in mining investment plans, Mr Koukoulas added. The Capital Investment Expectations Index was the only index which saw a decline for the December quarter compared to the September quarter, with the index falling 23.3 per cent from 10.3 points to 7.9 points. Year-on-year, the index dropped 33.6 per cent. The ongoing weakness in expected selling prices is consistent with the near record low inflation rate that has been evident in recent quarters, and suggests that official interest rates will remain very low, at least in the near term, Mr Koukoulas noted. Expectations for selling prices in the three months to 31 December remained flat compared to last quarter, with the index at 9.3 points. Some 19.8 per cent of firms expect to increase their selling prices in the December quarter, while 10.5 per cent said they would decrease selling prices. Compared to the final quarter of 2015, the Selling Prices Expectations Index has fallen 42.6 per cent from 16.2 points. Profit expectations were up 81.9 per cent for the December quarter compared to the September quarter, with all industries flagging an increase in profits. The Profit Expectations Index rose from 9.4 points in the

3 Index September quarter to 17.1 points in the December quarter, with 33.6 per cent of executives expecting to see greater profits in the final three months of the year. However, when compared to the same time last year, the Profit Expectations Index fell 25.3 per cent from 22.9 points. Meanwhile, 22.5 per cent of companies said they would employ more staff in Q4 compared to Q3, while 9.5 per cent said they would decrease staff numbers. The Employment Expectations Index climbed 58.5 per cent to 13.0 points. The Retail industry returned especially strong scores when looking ahead to the holiday period, with retailers expecting higher sales, employee numbers, profits and capital investment in the December quarter. The uptick in expectations follows three consecutive quarters of declining expectations among Retail businesses. Most notably, the Employment Expectations Index for the Retail sector leapt from 0.2 points to 12.4 points. The Selling Prices Expectations Index fell, sliding 50.3 per cent from 17.3 points to 8.6 points, which is consistent with discounting in the sector. Compared to the corresponding quarter in 2015, expectations for all components (Sales, Profits, Employment, Capital Investment and Selling Prices) were lower Retail Industry - Expectations for Q Quarter Business Expectations Index Sales Employees Selling Prices Profits Capital Investment Looking back on the June quarter, businesses generally reported an improvement in actual results for Q2 compared to Q1. The Business Actuals Index was up 45.9 per cent from 6.1 points to 8.9 points. In particular, profits saw a strong improvement in the second quarter, with the index increasing more than sevenfold from 1.1 points to 7.9 points. Some 28.9 per cent of companies said they had increased their profits in the second quarter (compared to the first quarter), while 21.1 per cent said they had seen lower profits in that period. With the new year approaching, 58.0 per cent of businesses said they are more optimistic about business growth in 2017 compared to The Services industry had the most upbeat outlook, with 66.7 per cent of firms saying they were more optimistic about growth in 2017, compared to 21.1 per cent who are less optimistic (net result: 45.6 points). This optimism reflects the industry s broadly positive sentiment moving into the December quarter: companies in the Services sector said they anticipate an increase in sales, employment, profits and selling prices in the three months to 31 December, but lower capital investment. By comparison, just 54.2 per cent of Wholesalers said they are more optimistic about growth in 2017 compared to 2016, while 39.0 per cent said they are less optimistic (net result: 15.3 points).

4 Are you generally more optimistic about business growth next year compared to 2016? Services 66.7 Finance etc Transport etc Construction Retail Wholesale All Firms % answered 'Yes' Optimism regarding the results of July s federal election is waning, with just 15.3 per cent of firms expecting a positive impact (down from 20.7 per cent in the August survey). Some 10.7 per cent of businesses said they expect a negative impact. However, the majority of respondents (63.5 per cent) said the result will have no impact on their business. The rest are unsure what impact the result will have. The Finance, Insurance and Real Estate sector maintains its positive outlook, with 27.6 per cent of companies in that industry forecasting a positive impact, compared to just 5.2 per cent that expect a negative impact (net result: 22.4 points). Meanwhile, 20.7 per cent of Construction companies expect a poor outcome form the result of the election, compared to 13.8 per cent that anticipate a good outcome (net result: -6.9 points) Contacts: Bryony Duncan-Smith DuncanSmithB@dnb.com.au ===

5 The latest D&B Australian Business Expectations Survey shows: Expectations index for the December quarter 2016: The Employment Expectations Index has increased to 13.0 points, up from 8.2 points in the previous quarter, but down from 14.5 points a year ago. The Sales Expectations Index has increased to 30.1 points, up from 21.4 points in the previous quarter and down from 38.0 points a year ago. Profit expectations for the December quarter have increased to 17.1 points, compared to 9.4 points in the previous quarter, but down from 22.9 points at the same time last year. Plans for capital investment are down, with the index at 7.9 points, compared to 10.3 points in the previous quarter and 11.9 points in Q The Selling Prices Expectations Index remained flat at 9.3 points, up marginally from 9.2 points in the previous quarter, but down from 16.2 points at the same time last year. Issues expected to influence operations in the December quarter 2016: 58.0 per cent of businesses are more optimistic about growth in the 2017 compared to 2016, while 25.7 per cent are less optimistic and 16.4 per cent are undecided. Consumer confidence (35.3 per cent) is identified as the issue most likely to influence business operations in the next quarter, followed by cash flow (17.3 per cent) and the level of the Australian dollar (10.0 per cent) 17.5 per cent of businesses see weak demand for their products and services as the biggest barrier to growth in the year ahead, while 13.9 per cent see cash flow as the biggest barrier per cent of businesses reported having a customer or supplier that became insolvent, or was otherwise unable to pay them in the past year per cent of businesses would choose to miss payments to trade suppliers if unable to pay all their bills on time, followed by payments on a business credit card (28.3 per cent) per cent of businesses would prefer a higher Australian dollar and 16.6 per cent a lower dollar, while 64.0 per cent think that it doesn t matter. 5.4 per cent are unsure per cent of businesses intend to seek finance or new credit in the quarter ahead to help their business grow, while 74.9 per cent will not, and 8.5 per cent are undecided. 15.3% of firms said the federal election result will have a positive impact on their businesses, while 10.7 % believe the result will have a negative impact and 63.5% said it would have no impact. 10.5% are undecided. Actual results reported for the June quarter 2016: Actual employment for the June quarter was up, with the index at 4.6 points, compared to 2.3 points in the previous quarter, but down from 5.6 points last year. Sales activity was up at 15.5 points, compared to 12.7 points in the previous quarter, but down from 19.0 points last year. The Actual Profits Index increased from was 7.9 points, up from 1.1 points in the previous quarter and 7.3 points recorded at the same time last year. Capital investment activity decreased to 7.7, down from 8.2 in the previous quarter, and 8.3 points last year. Selling prices were down, with the index at 6.6 points compared to 8.4 points in the previous quarter and 8.9 points last year. About Dun & Bradstreet Established in 1887, Dun & Bradstreet is Australia and New Zealand's longest established credit information bureau. Backed by its extensive financial database, D&B helps businesses to make informed credit decisions, and consumers to access personal credit information. D&B works across the entire credit lifecycle to deliver data-driven solutions in sales and marketing, credit reporting and debt management. Through analysis of financial and behavioural information, D&B also provides current and predictive assessments of the economy, business conditions and credit activity.

6 About the Business Expectations Survey Dun & Bradstreet s Business Expectations Survey is the only monthly survey to provide a comprehensive summary of key economic and financial conditions in Australia six months ahead of the latest quarterly national income accounts. The survey s unique forecasting ability supports Dun & Bradstreet s ongoing efforts to support business leaders, policy makers and commentators in responding to the changing dynamics of the Australian economy. Methodology Each month D&B asks a sample of executives if they expect an increase, decrease or no change in their quarterahead sales, profits, employees, capital investment and selling prices compared with the same quarter a year ago. The executives are also asked for actual changes over the twelve months to the latest completed quarter. In this issue, the final indexes for the latest quarters are based on approximately 1,200 responses obtained during July, August and September Charts and tables It is common practice to present the results of business expectations surveys as indexes showing the net balance of the positive and negative responses. However, this method of aggregating responses loses relevant information about the relative proportions and rates of change of the two (positive and negative) groups. Accordingly, the detailed charts at the top of pages seven to 11 in the D&B Australian Business Expectations Survey show separately the positive and negative components of each of the various indexes. These charts help provide a better insight into the expectations and performance of Australian business than that shown by movements in the simple aggregation of the positive and negative responses. The aggregate net balance indexes are shown in the charts at the bottom of pages seven to 11. About Dun & Bradstreet Established in 1887, Dun & Bradstreet is Australia and New Zealand's oldest credit information bureau. Backed by its extensive financial database, D&B helps businesses to make informed credit decisions, and consumers to access personal credit information. D&B works across the entire credit lifecycle to deliver data-driven solutions in sales and marketing, credit reporting and debt management. Through analysis of financial and behavioural information, D&B also provides current and predictive assessments of the economy, business conditions and credit activity.

7 Sales outlook (Quarterly Net Index) (30.1 points, up from 21.4) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The December quarter 2016 Sales Expectations Index is 30.1 points, up from 21.4 points in the previous quarter, but down from 38.0 points in the year prior. The index is now 14.6 points above its 10-year average of 15.5 points per cent of businesses expect an increase in their sales, while 12.3 per cent forecast a decrease, compared to the same time last year. Actual performance The Actual Sales Index for the second quarter of 2016 is 15.5 points, up from 12.7 points in the previous quarter, but down from 19.0 points a year earlier per cent of firms reported increased sales in the June quarter and 20.6 per cent had decreased sales compared to the previous year.

8 Profits outlook (Quarterly Net Index) (17.1 points, up from 9.4) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The outlook for profits in the December 2016 quarter is an index of 17.1 points, up from 9.4 points in the previous quarter, but down from 22.9 points last year. The outlook for profits is 10.3 points above the 10-year average index of 6.8 points per cent of businesses expect an increase in their profits during the quarter ahead, while 16.6 per cent forecast a decrease, compared to last year. Actual performance The Actual Profits Index for the June 2016 quarter is 7.9 points, up from 1.1 points in the previous quarter and 7.3 points recorded a year earlier. During the June quarter, 28.9 per cent of businesses increased their profits, while 21.1 per cent experienced a decrease.

9 Employment outlook (Quarterly Net Index) (13.0 points, up from 8.2) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The employment outlook for the December quarter 2016 has increased to 13.0 points, up from 8.2 points in the previous quarter, but down from 14.5 points a year earlier. The outlook for employment is 10.2 points above the 10- year average index of 2.8 points. Some 22.5 per cent of executives expect to employ more staff compared to a year ago, while 9.5 per cent expect to decrease their staff numbers. Actual performance The Actual Employment Index for the June 2016 quarter is 4.6 points, up from 2.3 points in the previous quarter, but down from 5.6 points a year earlier. In the June quarter 2016, 20.1 per cent of businesses hired new staff, compared to the 15.5 per cent that reduced their employment levels.

10 Capital Investment outlook (Quarterly Net Index) (7.9 points, down from 10.3) The positive and negative components of the D&B indexes are shown in the adjacent chart. Expectations The capital investment outlook for the December quarter 2016 is 7.9 points, down from 10.3 in the previous quarter and 11.9 points last year. The outlook for capital investment is 1.4 points above the 10-year average index of 6.5 points. While 18.8 per cent of businesses expect an increase in their investment level, 11.0 per cent forecast a decrease compared with a year earlier. Actual performance For the June quarter 2016, the actual index for investment is 7.7 points, down from 8.2 in the previous quarter and 8.3 a year ago per cent of firms increased their capital investment in the June quarter, while 11.1 per cent decreased capital spending.

11 Selling Prices outlook (Quarterly Net Index) (9.3 points, up from 9.2) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The Selling Prices Expectations Index for the December quarter 2016 is 9.3 points, on par with 9.2 points in the previous quarter and 16.2 points recorded a year earlier. The outlook for selling prices is 17.4 points lower than the 10-year average of 26.7 points. The proportion of firms expecting to have higher selling prices in the quarter ahead is 19.8 per cent, with 10.5 per cent expecting to have lower prices. Actual performance At 6.6 points, the Actual Selling Prices Index for the June 2016 quarter is down from 8.4 points in the previous quarter and 8.9 points last year per cent of businesses increased the level of their selling prices, while 11.7 per cent had decreased, compared to the same time the previous year.

12 D&B Survey Quarterly Indexes Expected Quarter Ahead: Net per cent of businesses expecting increases minus decreases QUARTER Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Sales Profits Employees Capital Investment Selling Prices Actual Quarter Behind: Net per cent of businesses reporting increases minus decreases QUARTER Sep 2014 Dec 2014 Mar 2015 June 2015 Sep 2015 Dec 2015 Mar 2016 June 2016 Sales Profits Employees Capital Investment Selling Prices Survey Months Jan- Mar 2015 Apr- Jun 2015 Jul Sep 2015 Oct Dec 2015 Jan Mar 2016 Apr Jun 2016 Jul Sep 2016 Number of Responses Quarterly Indexes: Each batch of monthly responses is given an equal weight in the calculation of the new quarterly indexes. Final indexes: Q (Expected) and Q (Actual) findings are based on the 1237 responses obtained during July, August and September 2016.

13 Expected Quarter Ahead: Net per cent of businesses expecting increases minus decreases QUARTER Mar Jun Sep Dec Mar Jun Sep Dec Sales Expectations Manufacturers: Wholesalers: Retailers: Construction: Transport, Communication,Utilities: Finance, Insurance, Real Estate: Services: All Industries Profits Expectations Manufacturers: Wholesalers: Retailers: Construction: Transport, Communication,Utilities: Finance, Insurance, Real Estate: Services: All Industries Employees Expectations Manufacturers: Wholesalers: Retailers: Construction: Transport, Communication, Utilities: Finance, Insurance, Real Estate: Services: All Industries

14 Expected Quarter Ahead: Net per cent of businesses expecting increases minus decreases QUARTER Mar Jun Sep Dec Mar Jun Sep Dec Capital Investment Expectations Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries Selling Prices Expectations Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries

15 Actual Quarter Behind: Net per cent of businesses reporting increases minus decreases QUARTER Sep Dec Mar June Sep Dec Mar June Sales Actual Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries Profits Actual Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries Employees Actual Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries

16 Actual Quarter Behind: Net per cent of businesses reporting increases minus decreases QUARTER Sep Dec Mar June Sep Dec Mar June Capital Investment Actual Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries Selling Prices Actual Manufacturers Wholesalers Retailers Construction Transport, Communication, Utilities Finance, Insurance, Real Estate Services All Industries

17 D&B Supplementary Questions Thinking about the quarter ahead, which issue do you think will influence the operations of your business the most? (September 2016) Interest rates Wages & salary growth Level of Australian dollar Access to credit Fuel Cash Consumer prices flow confidence All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % Don t (August 2016) Wages & Level of Access Don t Interest Fuel Cash Consumer salary Australian to credit rates prices flow confidence growth dollar All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Wages & Level of Access Don t Interest Fuel Cash Consumer salary Australian to credit rates prices flow confidence growth dollar All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

18 Thinking about your business for the quarter ahead, are you likely to seek finance or credit to help your business grow? (September 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

19 What do you see as the biggest barrier to growing your business in the year ahead? (September 2016) Access/ shortage of skilled labour Access/ shortage of funding Weak demand for products Cash flow Online selling by competi tors Utilities and operating costs sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Access/ shortage of skilled labour Access/ shortage of funding Weak demand for products Cash flow Online selling by competi tors Utilities and operating costs sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Access/ shortage of skilled labour Access/ shortage of funding Weak demand for products Cash flow Online selling by competi tors Utilities and operating costs sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

20 Would your business benefit if the Australian dollar was higher or lower than its current level? (September 2016) Higher Lower Doesn t matter sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Higher Lower Doesn t matter sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Higher Lower Doesn t matter sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

21 In the past 12 months, have any of your customers or suppliers become insolvent or otherwise unable to pay you? (September 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

22 Are you generally more optimistic about business growth next year compared to 2016? (September 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Yes No sure/don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

23 If you find yourself unable to pay all of your bills, which of the following would you choose to pay late/miss? (September 2016) Phone Internet Utilities Suppliers Rent/m ortgage Business loan/ overdraft Business credit card All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Phone Internet Utilities Suppliers Rent/m ortgage Business loan/ overdraft Business credit card All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Phone Internet Utilities Suppliers Rent/m ortgage Business loan/ overdraft Business credit card All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %

24 What impact will the Federal election result have on your business? (September 2016) Good Bad None sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (August 2016) Good Bad None sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services % (July 2016) Good Bad None sure/ don t All Firms % Manufacturers % Wholesale % Retail % Construction % Transport etc % Finance etc % Services %