Australian Business Expectations Survey

Australian Business Expectations Survey Dun & Bradstreet Q2 2017 PRELIMINARY RESULTS RELEASED 7 FEBRUARY 2017

Index BUSINESS CONFIDENCE IS SOLID, BUT WHERE ARE THE JOBS? Employment expectations for the June quarter of 2017 are at a more than three-year low. In Dun & Bradstreet s January Business Expectations Survey, businesses indicated that they would slow hiring in the quarter ahead, despite increased expectations for sales, profits and capital investment. Meanwhile, companies reported higher sales in the December quarter, but lower employment levels, selling prices, profits and capital investment. According to Stephen Koukoulas, economics adviser to Dun and Bradstreet: Business expectations through to the middle of 2017 are mixed, and have taken a step down from the optimism seen at the end of 2016. Encouragingly, expected sales continue to rise at a solid pace, which points to ongoing expansion in activity into 2017. Of note also is the steady rise in expected capital expenditure, which is an encouraging aspect of the survey given how weak the official business investment data have been for the last few years, Mr Koukoulas said. Dun & Bradstreet s Business Expectations Index, the average of the survey s measures of Sales, Profits, Employment and Capital Investment, climbed to 19.5 points for the June quarter of 2017, up 3.2 percent from 18.9 points for the March quarter 2017 and up 53.5 percent from the June quarter 2016 figure. The preliminary Q2 2017 result is 10.1 points above the 10-year average of 9.1 points. The index is currently at its highest point since the December quarter of 2015, when it reached 21.8 points. 30 20 10 0-10 -20-30 -40 Business Expectations Index 19.5 pts 7.8 pts 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. After a minor lift, expected selling prices are moderating, which indicates that inflation will remain very low through to at least the middle of 2017. The Selling Prices Expectations Index has a good record for matching broad changes in the official CPI data, Mr Koukoulas noted. The Sales Expectations Index jumped to 36.4 points in the June quarter, up from 28.1 points in the March quarter and 23.6 points in the previous corresponding quarter. For the June quarter of 2017, 44.8 percent of businesses expect to see an increase in sales compared to the June quarter of 2016, while 8.4 percent expected a decrease in sales. Expectations for sales increased quarter-on-quarter for all surveyed industries except Retail; and expectations for sales increased year-on-year for all industries except Finances, Insurance & Real Estate. Plans for capital investment continue to increase: 19.4 percent of companies say they will increase capital spending in June 2017 compared to June 2016, while 5.9 percent say they will lower their capital

expenditure. The Capital Investment Index now sits at 13.5 points, up from 11.8 points in the March quarter and 8.7 points for the June quarter of 2016. Expectations for profit in the June quarter are largely on par with the March quarter, with the Profit Expectations Index moving from 21.0 points to 21.5 points. However, compared to the June quarter of 2016, businesses are notably more optimistic regarding profits: the index has jumped 110.5 percent from 10.2 points. Despite the apparent confidence regarding sales, profits and capital investment, the Employment Expectations Index slipped to its lowest point since the December quarter of 2013. The index fell to 6.7 points for the June quarter, compared to 14.6 points in the March quarter and 8.3 points in the previous corresponding quarter. For the coming quarter, 16.5 percent of businesses say they intend to employ more staff than a year ago, while 9.9 percent expect to employ fewer. Of some concern is the pull-back in expectations for employment, which has dipped to its lowest level in over three years. This indicator fits well with the official labour force data which continues to show a sluggish pace of employment growth and a minor lift in the unemployment rate, Mr Koukoulas said. Of the seven industries surveyed, only the Wholesale and Construction industries had a higher Employment Expectations Index for the June quarter compared to the March quarter. The Retail industry saw a particularly sharp decline in employment expectations, with the index dropping from 11.3 points in the first quarter to -3.5 points in the second quarter. In general, Retailers expressed a muted outlook for the second quarter. Expectations for sales, employment, profits and selling prices were lower than the previous quarter. However, compared to the same time a year earlier, the Sales Expectations Index and Profit Expectations Index were higher. Furthermore, plans for capital expenditure were up in the Retail sector, with the index lifting to 9.2 points, up from 4.7 points in the March quarter and 9.1 points in the previous corresponding quarter. The Services sector also saw quarterly declines in four out of five components: its Employment, Selling Prices, Profit and Capital Investment Expectations Indices were down, but its Sales Expectations Index rose to a two-year high of 39.3 points. The Services sector s lowered expectations for the quarter ahead are reflected in its response to the question Are you generally more optimistic about business growth this year compared to 2016? Just 50 percent of Services companies said they were more optimistic (the lowest positive response of all seven sectors) while 32.1 percent said they were not (the highest negative response of all seven sectors). By comparison, the Wholesale industry had the highest positive response to the same question (75.9 percent are more optimistic) and the lowest negative response (13.8 percent are less optimistic). This also reflects the sector s broader survey results. Its Sales Expectations Index (50.4 points) is at its highest point

since Q2 2000; its Profit Expectations Index (29.1 points) is at its highest point since Q1 2013; its Employee Expectations Index (18.2 points) is at its highest point since Q4 2003, as is its overall Business Expectations Index (28.1 points). Meanwhile, after returning the lowest Business Expectations Index of all sectors in Q1 2017, the Construction industry bounced back for the second quarter: its Business Expectations Index rose from 5.9 points to 23.4 points, driven by increased expectations across all components. Most notably, its Sales Expectations Index leapt from 9.8 points to 39.0 points. Bucking the national trend, Construction s employment expectations also saw a sharp increase from 5.8 points in Q1 to 18.3 points in Q2. Some 23.4 percent of Construction companies said they would hire more staff in Q2 2017 than in Q2 2016, while 5.0 percent said they would employ fewer. However, Construction firms also flagged Access to or a shortage of skilled labour as the biggest barrier to business growth in the year ahead. Across all sectors, actual employment numbers were down in the December quarter 2016 compared to the September quarter: the Employment Actuals Index slid from 4.8 points to 0.5 points its lowest since the September quarter of 2013. Q4 2016 also saw lower selling prices (8.7 points, down from 10.3 points in Q3), profits (6.8 points, down from 8.3 points) and capital investment (5.8 points, down from 9.1 points). Only the Sales Actuals Index rose in Q4 2016, jumping from 12.8 points to 18.0 points. All industries except Services saw an increase in Sales in Q4 2016 compared to Q3 (7.8 points, down from 14.2 points). By and large, businesses do not expect to be impacted by the result of November s US federal election. Some 63.8 percent of all businesses said the outcome will not affect their operations. 9.8 percent expect a positive outcome, compared to the 8.6 percent who expect a negative impact. The remaining 17.9 percent are unsure. In general, medium-sized companies are more optimistic on this matter than small companies. All States NSW ACT NT Qld SA Tas Vic WA What impact will the results of the US federal election have on your business? 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 5.8 6.3 9.8 15.8 13.6 12.7 15.2 12.1 13.8 9.2 8.6 12.5 5.5 3.0 10.0 10.5 63.6 62.1 Businesses based in the Northern Territory were the least optimistic overall about Donald Trump s election: 13.6 percent of companies said they expect a negative impact, and no companies expect a positive impact. South Australian companies were the most optimistic overall, with 15.2 percent anticipating a positive outcome, compared to the 3.0 percent who expect a negative outcome. Similarly, 12.1 percent of Tasmaniabased businesses expect a positive outcome, while none expect a negative outcome. Businesses feeling optimistic are most likely to be from Western Australia (27.5 percent), while businesses anticipating a negative impact are more likely to be from Victoria (28.6 percent). Overall, the Business Expectations Survey points to the economy continuing to grow at a moderate pace, with a generally soft tone for job creation. Inflation is expected to stay low which should influence the Reserve Bank to keep interest rates at record lows, Mr Koukoulas concluded. === Contacts: Bryony Duncan-Smith DuncanSmithB@dnb.com.au +61 3 9828 3675 63.8 72.7 63.6 63.6 62.5 57.9 66.3 Positive Negative No Impact Not sure 23.0 24.2 17.9 15.8 18.2 18.2 18.8 13.6 10.0

The latest D&B Australian Business Expectations Survey shows: Expectations index for the June quarter 2017: The Employment Expectations Index has fallen to 6.7 points, down from 14.6 points in the March quarter and 8.3 points a year ago. The Sales Expectations Index climbed to 36.4 points, up from 28.1 points in the previous quarter and 23.6 points in the June quarter of 2016. The Profit Expectations Index rose 21.5 points, up slightly from 21.0 points in the March quarter and up from 10.2 points a year ago. Plans for capital investment are up, with the index moving from 11.8 points in the March quarter to 13.5 points in the June quarter, and up from 8.7 points a year ago. The Selling Prices Expectations Index fell to 12.2 points, down from 14.6 points in the March quarter and 13.7 points at the same time last year. Issues expected to influence operations in the June quarter 2017: 61.2 percent of businesses are more optimistic about growth in the 2017 compared to 2016, while 23.7 percent are less optimistic and 15.1 percent are undecided. Consumer confidence (36.8 percent) is identified as the issue most likely to influence business operations in the next quarter, followed by cash flow (16.8 percent) and the level of the Australian dollar (9.3 percent). Weak demand for their products and services and utilities and operational costs were identified as the biggest barriers to growth in the year ahead (14.9 percent each), followed by online selling by competitors (12.4 percent). 29.8 percent of businesses reported having a customer or supplier that became insolvent, or was otherwise unable to pay them in the past year. 34.3 percent 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 (21.9 percent). 19.0 percent of businesses would prefer a higher Australian dollar and 13.4 percent a lower dollar, while 63.2 percent think that it doesn t matter. 4.4 percent are unsure. 14.2 percent of businesses intend to seek finance or new credit in the quarter ahead to help their business grow, while 79.3 percent will not, and 6.6 percent are undecided. 9.8 percent of businesses expect a positive impact from the result of the US federal election. 8.6 percent expect a negative result and 63.8 percent think they will not be impacted. 17.9 percent are unsure. Actual results reported for the December quarter 2016: The Actual Employment Index for the December quarter was 0.5 points, down from 4.8 points in the September quarter and 8.5 points a year earlier. The Actual Sales Index was up, moving from 12.8 points in the September quarter to 18.0 points in the December quarter. However, the current figure is down from 22.4 points a year earlier. Profits were down, with the index falling to 6.8 points in the December quarter compared to 8.3 points in the September quarter and 8.0 points a year ago. Capital investment activity decreased: the index fell to 5.8 points in the December quarter, down from 9.1 points in the September quarter and 11.9 points in the previous corresponding quarter. The Actual Selling Prices Index fell to 8.7 points, down from 10.3 points in the previous quarter and 11.2 points in the December quarter of 2015. 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.

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 preliminary indexes for the latest quarters are based on approximately 400 responses obtained during January 2017. 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 six to 10 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 six to 10. 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.

Sales outlook (Quarterly Net Index) (36.4 points, up from 28.1 points) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The June quarter 2017 Sales Expectations Index is 34.6 points, up from 28.1 points in the previous quarter and 23.6 points in the year prior. The index is now 19.1 points above its 10-year average of 17.3 points. 44.8 percent of businesses expect an increase in their sales for the June quarter of 2017, while 8.4 percent forecast a decrease, compared to the same time in 2016. Actual performance The Actual Sales Index for the final quarter of 2016 is 18.0 points, up from 12.8 points in the September quarter but down from 22.2 points a year earlier. 37.2 percent of firms reported increased sales in the December quarter and 19.2 percent had decreased sales compared to the previous corresponding quarter. D&B Australian Business Expectations Survey conducted January 2017

Profits outlook (Quarterly Net Index) (21.5 points, up from 21.0 points) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The outlook for profits in the June 2017 quarter is an index of 21.5 points, up slightly from 21.0 points in the previous quarter and 10.2 points last year. The outlook for profits is 13.2 points above the 10-year average index of 8.3 points. 35.6 percent of businesses expect an increase in their profits during the June quarter, while 14.2 percent forecast a decrease, compared to the same period last year. Actual performance The Actual Profits Index for the December 2016 quarter is 6.8 points, down from 8.3 points in the previous quarter 8.0 points in the previous corresponding quarter. During the December quarter, 26.9 percent of businesses increased their profits, while 20.1 percent experienced a decrease compared to the December quarter of 2015. D&B Australian Business Expectations Survey conducted January 2017

Employment outlook (Quarterly Net Index) (6.7 points, down from 14.6 points) The positive and negative components of the D&B net indexes are shown in the adjacent chart. Expectations The employment outlook for the June quarter 2017 has fallen to 6.7 points, down from 14.6 points in the previous quarter and 8.3 points a year earlier. The outlook for employment is 3.2 points above the 10- year average index of 3.5 points. Some 16.5 percent of executives expect to employ more staff in the June quarter 2017 compared to the June quarter 2016, while 9.9 percent expect to decrease their staff numbers. Actual performance The Actual Employment Index for the December 2016 quarter is 0.5 points, down from 4.8 points in the previous quarter and 8.5 points a year earlier. In the December quarter 2016, 14.2 percent of businesses employed more staff than a year earlier, compared to the 13.7 percent that reduced their employment levels. D&B Australian Business Expectations Survey conducted January 2017

Capital Investment outlook (Quarterly Net Index) (13.5 points, up from 11.8 points) The positive and negative components of the D&B indexes are shown in the adjacent chart. Expectations The capital investment outlook for the June quarter 2017 is 13.5 points, up from 11.8 in the previous quarter and 8.7 points a year earlier. The outlook for capital investment is 6.4 points above the 10-year average index of 7.1 points. 19.4 percent of businesses expect an increase in their investment level, while 5.9 percent plan to decrease investment levels in Q2 2017 compared with a year earlier. Actual performance For the December quarter 2016, the actual index for investment is 5.8 points, down from 9.1 points in the previous quarter and 11.9 points a year ago. Some 16.1 percent of firms increased their capital investment in Q4 2016 compared to Q4 2015, while 10.3 percent decreased capital spending. D&B Australian Business Expectations Survey conducted January 2017

Selling Prices outlook (Quarterly Net Index) (12.2 points, down from 14.6 points) 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 June quarter 2017 is 12.2 points, down from 14.6 points in the previous quarter and 13.7 points a year earlier. The outlook for selling prices is 12.6 points lower than the 10-year average of 25.9 points. Some 20.2 percent of firms expect to have higher selling prices in the June quarter 2017 compared to a year earlier, while 8.0 percent expect lower prices. Actual performance At 8.7 points, the Actual Selling Prices Index for the December 2016 quarter is down from 10.3 points in the previous quarter and 11.2 points a year ago. While 17.1 percent of businesses increased their selling prices compared to the same time a year earlier, 8.5 percent had decreased selling prices. D&B Australian Business Expectations Survey conducted January 2017

D&B Survey Quarterly Indexes Expected Quarter Ahead: Net per cent of businesses expecting increases minus decreases QUARTER Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 June 2017 Sales 28.6 38.0 32.7 23.6 21.4 30.1 28.1 36.4 Profits 15.9 22.9 18.5 10.2 9.4 17.1 21.0 21.5 Employees 11.7 14.5 12.0 8.3 8.2 13.0 14.6 6.7 Capital Investment 12.8 11.9 12.6 8.7 10.3 7.9 11.8 13.5 Selling Prices 14.5 16.2 15.1 13.7 9.2 9.3 14.6 12.2 Actual Quarter Behind: Net per cent of businesses reporting increases minus decreases QUARTER Mar 2015 June 2015 Sep 2015 Dec 2015 Mar 2016 June 2016 Sep 2016 Dec 2017 Sales 10.1 19.0 19.1 22.4 12.7 15.5 12.8 18.0 Profits 4.8 7.3 8.5 8.0 1.1 7.9 8.3 6.8 Employees 5.1 5.6 5.5 8.5 2.3 4.6 4.8 0.5 Capital Investment 6.2 8.3 10.8 11.9 8.2 7.7 9.1 5.8 Selling Prices 10.9 8.9 13.3 11.2 8.4 6.6 10.3 8.7 Survey Months Jul Sep 2015 Oct Dec 2015 Jan Mar 2016 Apr Jun 2016 Jul Sep 2016 Oct - Dec 2016 Jan 2017 Number of Responses 1231 1241 1238 1242 1237 1239 410 Quarterly Indexes: Each batch of monthly responses is given an equal weight in the calculation of the new quarterly indexes. Preliminary indexes: Q2 2017 (Expected) and Q4 2016 (Actual) findings are based on the 410 responses obtained during January 2017.

Expected Quarter Ahead: Net per cent of businesses expecting increases minus decreases QUARTER Sep Dec Mar Jun Sep Dec Mar Jun 2015 2015 2016 2016 2016 2016 2016 2017 Sales Expectations Manufacturers: 29.7 42.6 31.8 31.8 35.0 33.9 34.9 37.7 Wholesalers: 34.2 44.2 35.8 29.9 25.9 36.0 32.5 50.4 Retailers: 30.4 51.5 38.6 20.8 17.5 32.8 28.5 27.0 Construction: 16.7 30.7 23.7 18.4 12.1 20.6 9.8 39.0 Transport, Communication,Utilities: 15.4 26.4 31.7 23.1 13.0 25.6 30.1 31.1 Finance, Insurance, Real Estate: 46.9 31.2 30.9 25.5 24.2 33.2 27.7 32.2 Services: 27.8 39.2 36.5 15.3 22.3 28.4 33.5 39.3 All Industries 28.6 38.8 32.7 23.6 21.4 30.1 28.1 36.4 Profits Expectations Manufacturers: 17.0 20.4 19.0 9.4 15.5 16.4 29.7 29.7 Wholesalers: 13.7 13.6 17.0 11.9 15.8 19.6 22.3 29.1 Retailers: 13.9 30.9 15.7 9.0 5.9 17.6 24.0 16.3 Construction: 3.4 20.8 13.3 5.6-5.4 14.4 3.6 27.5 Transport, Communication,Utilities: 9.0 25.2 20.4 7.6 3.2 10.3 19.8 18.5 Finance, Insurance, Real Estate: 34.8 22.9 14.9 20.5 19.6 19.8 21.6 18.1 Services: 17.4 26.4 29.2 7.5 11.3 21.5 25.5 11.9 All Industries 15.9 22.9 18.5 10.2 9.4 17.1 21.0 21.5 Employees Expectations Manufacturers: 7.3 9.5 11.5 5.0 13.0 17.0 14.5 2.9 Wholesalers: 12.3 12.0 6.1 5.7 7.8 10.1 17.8 18.2 Retailers: 9.1 18.4 12.9 4.7 0.2 12.4 11.5-3.5 Construction: 13.2 17.0 6.2 13.6 1.7 5.1 5.8 18.3 Transport, Communication, Utilities: 9.9 6.6 15.5 6.3 16.0 10.8 15.0 9.5 Finance, Insurance, Real Estate: 20.1 10.9 12.7 11.2 3.6 14.5 16.1 6.0 Services: 9.5 27.2 18.9 11.4 15.1 21.0 21.8 4.3 All Industries 11.7 14.5 12.0 8.3 8.2 13.0 14.6 6.7

Expected Quarter Ahead: Net per cent of businesses expecting increases minus decreases QUARTER Sep Dec Mar Jun Sep Dec Mar Jun 2015 2015 2016 2016 2016 2016 2017 2017 Capital Investment Expectations Manufacturers 3.6 9.0 11.4 6.5 14.5 7.1 17.8 15.9 Wholesalers 14.0 13.5 7.4 5.9 11.2 11.0 9.1 14.7 Retailers 10.6 19.0 15.0 9.1 2.4 5.9 4.7 9.2 Construction 12.5 10.1 2.1 7.7 3.5-0.8 4.2 8.7 Transport, Communication, Utilities 8.8 5.4 15.2 13.5 9.6 8.1 14.7 11.9 Finance, Insurance, Real Estate 27.1 13.1 19.8 11.4 21.1 15.6 13.6 19.4 Services 12.8 13.1 17.0 7.0 10.1 8.1 18.5 14.0 All Industries 12.8 11.9 12.6 8.7 10.3 7.9 11.8 13.5 Selling Prices Expectations Manufacturers 14.2 16.3 12.8 15.0 12.8 9.2 16.4 16.7 Wholesalers 18.1 25.1 27.3 18.8 10.2 6.2 15.9 26.4 Retailers 22.4 27.4 22.6 25.4 17.3 8.6 24.4 9.8 Construction -0.3 13.7 12.3 7.4 0.8 12.5 8.7 10.6 Transport, Communication, Utilities 9.5 9.5 11.5 10.0 8.4 7.1 12.7 7.4 Finance, Insurance, Real Estate 29.9 10.3 6.4 11.4 4.0 9.9 9.9 17.6 Services 4.5 10.7 13.0 7.9 10.8 11.5 14.1 6.6 All Industries 14.5 16.2 12.1 13.7 9.2 9.3 14.6 12.2

Actual Quarter Behind: Net per cent of businesses reporting increases minus decreases QUARTER Mar June Sep Dec Mar June Sep Dec 2015 2015 2015 2015 2016 2016 2016 2016 Sales Actual Manufacturers 14.6 16.7 20.9 15.8 24.2 22.7 17.6 21.7 Wholesalers 18.2 33.7 14.0 18.1 20.4 14.9 14.8 31.4 Retailers 8.3 14.3 12.7 29.4 11.8 9.8 5.8 13.4 Construction -2.3 10.7 15.4 24.0-3.9 3.6 7.2 10.6 Transport, Communication, Utilities -9.6 25.0 19.9 19.4 7.5 13.7 10.6 11.2 Finance, Insurance, Real Estate 27.3 19.2 36.5 27.1 20.1 25.9 18.7 29.7 Services 13.7 13.6 14.6 22.9 9.1 18.2 14.2 7.8 All Industries 10.1 19.0 19.1 22.4 12.7 15.5 12.7 18.0 Profits Actual Manufacturers 0.0 7.5 8.3 2.0 6.8 7.8 8.4 13.1 Wholesalers 13.0 7.6-0.5 4.7 4.5 2.6 5.2 4.3 Retailers -0.4 5.0 2.2 11.1 3.6 5.6-2.0 2.4 Construction -6.3 2.9 13.3 10.8-13.4 7.4 3.1 5.0 Transport, Communication, Utilities -7.7 12.4 10.0 4.2-0.5 0.9 10.9 18.5 Finance, Insurance, Real Estate 30.7 7.9 23.7 13.2 7.4 15.7 19.1 15.7 Services 7.7 7.7 8.3 10.1-0.7 15.0 13.3 5.1 All Industries 4.8 7.3 8.5 8.0 1.1 7.9 8.3 6.8 Employees Actual Manufacturers -2.6-3.8 3.2 9.0 2.4 8.5 4.5-2.9 Wholesalers 11.2 7.2-0.9 7.8 6.2-8.4-1.9 3.1 Retailers 2.5 4.2-0.7 9.7-5.2 6.6 4.6 2.4 Construction -2.5 6.3 0.9 5.4-4.3 3.2 0.2 7.3 Transport, Communication, Utilities -0.5 12.6 8.6 2.3 1.7 6.4 9.1-3.6 Finance, Insurance, Real Estate 20.1 10.9 14.3 13.6 6.1 8.0 12.8 6.0 Services 8.6 6.8 13.3 11.8 9.6 7.6 4.4-8.9 All Industries 5.1 5.6 5.5 8.5 2.3 4.6 4.8 0.5

Actual Quarter Behind: Net per cent of businesses reporting increases minus decreases QUARTER Mar June Sep Dec Mar June Sep Dec 2015 2015 2015 2015 2016 2016 2016 2017 Capital Investment Actual Manufacturers -2.4 8.5 11.7 15.8 12.6 13.2 14.3 10.9 Wholesalers 9.3 11.7 7.0 13.3 8.6 7.7 9.4 1.9 Retailers 10.3 13.0 11.8 11.7 5.1 7.3 5.0-4.4 Construction -0.7 5.0 7.5 3.4 4.8 0.0 2.3-3.7 Transport, Communication, Utilities 1.9 6.4 9.1 10.6 0.6 8.1 14.6 2.8 Finance, Insurance, Real Estate 20.6 11.7 20.7 13.0 14.6 15.6 14.4 29.2 Services 5.6 2.1 7.6 15.3 10.8 3.8 3.5 3.9 All Industries 6.2 8.3 10.8 11.9 8.2 7.7 9.1 5.8 Selling Prices Actual Manufacturers 7.4 9.3 13.4 10.2 10.9 14.1 9.7 13.1 Wholesalers 19.2 20.4 32.1 17.0 8.3 5.4 17.4 19.4 Retailers 11.4 16.0 18.3 26.3 21.2 6.7 15.6 2.9 Construction -6.5 6.2 3.2 5.3-3.7 6.3 8.3 6.0 Transport, Communication, Utilities 6.9 4.6 6.9 7.0 6.5 1.1 5.6-8.7 Finance, Insurance, Real Estate 30.7 4.0 14.3 7.4 8.1 9.0 8.2 17.6 Services 4.9 1.6 4.9 5.2 7.6 3.8 7.0 10.5 All Industries 10.9 8.9 13.3 11.2 8.4 6.6 10.3 8.7

D&B Supplementary Questions Thinking about the quarter ahead, which issue do you think will influence the operations of your business the most? (January Wages & Level of Access Don t 2017) Interest Fuel Cash Consumer salary Australian to credit rates prices flow confidence growth dollar All Firms 410 6.59 36.83 5.85 16.83 7.07 9.27 5.85 11.71 100% Manufacturers 3.45 27.59 5.17 17.24 10.34 20.69 5.17 10.34 100% Wholesale 5.17 44.83 3.45 13.79 5.17 17.24 5.17 5.17 100% Retail 10.34 34.48 5.17 20.69 6.90 6.90 1.72 13.79 100% Construction 4.84 37.10 0.00 17.74 12.90 3.23 9.68 14.52 100% Transport etc 1.72 27.59 25.86 17.24 6.90 6.90 6.90 6.90 100% Finance etc 18.97 39.66 0.00 8.62 3.45 6.90 3.45 18.97 100% Services 1.72 46.55 1.72 22.41 3.45 3.45 8.62 12.07 100% (December 2016) Wages & salary growth Level of Australian dollar Access to credit Interest Fuel Cash Consumer rates prices flow confidence All Firms 413 7.75 33.41 3.63 18.40 5.81 10.90 4.36 15.74 100% Manufacturers 0.00 35.00 0.00 23.33 5.00 13.33 1.67 21.67 100% Wholesale 8.47 27.12 1.69 18.64 3.39 16.95 1.69 22.03 100% Retail 10.17 40.68 1.69 15.25 6.78 8.47 1.69 15.25 100% Construction 10.34 37.93 0.00 17.24 5.17 8.62 6.90 13.79 100% Transport etc 5.17 18.97 18.97 24.14 3.45 15.52 0.00 13.79 100% Finance etc 13.79 36.21 1.72 17.24 5.17 3.45 13.79 8.62 100% Services 6.56 37.70 1.64 13.11 11.48 9.84 4.92 14.75 100% Don t (November 2016) Wages & salary growth Level of Australian dollar Access to credit Interest Fuel Cash Consumer rates prices flow confidence All Firms 414 5.07 40.82 4.11 16.91 4.11 11.35 5.80 11.84 100% Manufacturers 1.69 45.76 0.00 23.73 1.69 13.56 0.00 13.56 100% Wholesale 1.64 45.90 1.64 14.75 1.64 22.95 3.28 8.20 100% Retail 3.33 43.33 1.67 20.00 5.00 13.33 3.33 10.00 100% Construction 8.26 37.93 0.00 17.24 6.90 3.45 8.62 17.24 100% Transport etc 5.08 35.59 18.64 11.86 5.08 6.78 8.47 8.47 100% Finance etc 8.47 40.68 0.00 13.56 3.39 13.56 11.86 8.47 100% Services 6.90 36.21 6.90 17.24 5.17 5.17 5.17 17.24 100% Don t

Thinking about your business for the quarter ahead, are you likely to seek finance or credit to help your business grow? (January 2017) Not Yes No sure/don t All Firms 410 14.15 79.27 6.59 100% Manufacturers 8.62 86.21 5.17 100% Wholesale 15.52 77.59 6.90 100% Retail 12.07 75.86 12.07 100% Construction 19.35 79.03 1.61 100% Transport etc 18.97 70.69 10.34 100% Finance etc 8.62 84.48 6.90 100% Services 15.52 81.03 3.45 100% (December 2016) Not Yes No sure/don t All Firms 413 18.89 76.76 4.36 100% Manufacturers 18.33 67.67 5.00 100% Wholesale 16.95 77.97 5.08 100% Retail 16.95 77.97 5.08 100% Construction 20.69 77.59 1.72 100% Transport etc 24.14 68.97 6.90 100% Finance etc 15.52 81.03 3.45 100% Services 19.67 77.05 3.28 100% (November 2016) Not Yes No sure/don t All Firms 414 13.29 80.29 6.28 100% Manufacturers 10.17 89.83 0.00 100% Wholesale 13.11 78.69 8.20 100% Retail 16.67 73.33 10.00 100% Construction 12.07 77.59 10.34 100% Transport etc 18.64 76.27 5.08 100% Finance etc 16.95 77.97 5.08 100% Services 5.17 89.66 5.17 100%

What do you see as the biggest barrier to growing your business in the year ahead? (January 2017) Access/ shortage of skilled labour Access/ shortage of funding Weak demand for products Cash flow Online selling by competi tors Utilities and operating costs Not sure/ don t All Firms 410 11.71 5.12 14.88 12.20 12.44 14.88 28.78 100% Manufacturers 12.07 3.45 17.24 13.79 8.62 13.79 31.03 100% Wholesale 6.90 3.45 25.86 6.90 15.52 15.52 25.86 100% Retail 3.45 1.72 12.07 15.52 22.41 15.52 29.31 100% Construction 24.19 6.45 11.29 6.45 8.06 12.90 30.65 100% Transport etc 12.07 5.17 10.34 13.79 6.90 27.59 24.14 100% Finance etc 6.90 6.90 5.17 13.79 15.52 10.34 41.38 100% Services 15.52 8.62 22.41 15.52 10.34 8.62 18.97 100% (December 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 Not sure/ don t All Firms 413 11.86 6.78 16.46 14.29 14.77 13.80 22.03 100% Manufacturers 8.33 8.33 16.67 16.67 16.67 13.33 20.00 100% Wholesale 10.17 1.69 15.25 11.86 22.03 15.25 23.73 100% Retail 11.86 5.08 10.17 10.17 27.12 11.86 23.73 100% Construction 17.24 8.62 18.97 12.07 6.90 12.07 24.14 100% Transport etc 10.34 3.45 17.24 20.69 13.79 22.41 12.07 100% Finance etc 13.79 5.17 18.97 10.34 12.07 12.07 27.59 100% Services 11.48 14.75 18.03 18.03 4.29 9.84 22.95 100% (November 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 Not sure/ don t All Firms 414 11.84 5.56 19.08 11.84 14.01 13.53 24.15 100% Manufacturers 10.17 3.39 37.29 15.25 5.08 13.56 15.25 100% Wholesale 3.28 6.56 19.67 9.84 21.31 14.75 24.59 100% Retail 6.67 3.33 20.00 5.00 23.33 11.67 30.00 100% Construction 20.69 5.17 12.07 15.52 5.17 17.24 24.14 100% Transport etc 10.17 5.08 11.86 10.17 18.64 15.25 28.81 100% Finance etc 8.47 8.47 20.34 16.95 11.86 11.86 22.03 100% Services 24.14 6.90 12.07 10.34 12.07 10.34 24.14 100%

Would your business benefit if the Australian dollar was higher or lower than its current level? (January 2017) Higher Lower Doesn t matter Not sure/ don t All Firms 410 19.02 13.41 63.17 4.39 100% Manufacturers 27.59 25.86 46.55 0.00 100% Wholesale 36.21 17.24 37.93 8.62 100% Retail 27.59 5.17 62.07 5.17 100% Construction 8.06 9.68 80.65 1.61 100% Transport etc 13.79 20.69 60.34 5.17 100% Finance etc 10.34 8.62 75.86 5.17 100% Services 10.34 6.90 77.59 5.17 100% (December 2016) Higher Lower Doesn t matter Not sure/ don t All Firms 413 14.04 12.35 67.07 6.54 100% Manufacturers 13.33 13.33 61.67 11.67 100% Wholesale 38.98 13.56 37.29 10.17 100% Retail 15.25 10.17 69.49 5.08 100% Construction 5.17 6.90 84.48 3.45 100% Transport etc 15.52 17.24 60.34 6.90 100% Finance etc 3.45 13.79 75.86 6.90 100% Services 6.56 11.48 80.33 1.64 100% (November 2016) Higher Lower Doesn t matter Not sure/ don t All Firms 414 19.32 14.25 64.01 2.42 100% Manufacturers 8.47 23.73 64.41 3.39 100% Wholesale 34.43 14.75 49.18 1.64 100% Retail 33.33 6.67 56.67 3.33 100% Construction 18.97 6.90 74.14 0.00 100% Transport etc 18.64 10.17 69.49 1.69 100% Finance etc 8.47 22.03 66.10 3.39 100% Services 12.07 15.52 68.97 3.45 100%

In the past 12 months, have any of your customers or suppliers become insolvent or otherwise unable to pay you? (January 2017) I don t Yes No /I d rather not say All Firms 406 29.80 67.24 2.96 100% Manufacturers 24.14 70.69 5.17 100% Wholesale 31.03 67.24 1.72 100% Retail 29.31 65.52 5.17 100% Construction 31.15 68.85 0.00 100% Transport etc 31.03 67.24 1.72 100% Finance etc 26.79 67.86 5.36 100% Services 35.09 63.16 1.75 100% (December 2016) I don t Yes No /I d rather not say All Firms 407 31.94 66.58 1.47 100% Manufacturers 27.12 69.49 3.39 100% Wholesale 56.90 41.38 1.72 100% Retail 20.69 77.59 1.72 100% Construction 25.00 73.21 1.79 100% Transport etc 34.48 65.52 0.00 100% Finance etc 21.05 77.19 1.75 100% Services 37.70 62.30 0.00 100% (November 2016) I don t Yes No /I d rather not say All Firms 412 30.58 66.75 2.67 100% Manufacturers 40.68 59.32 0.00 100% Wholesale 34.43 57.38 8.20 100% Retail 20.00 75.00 5.00 100% Construction 34.48 65.52 0.00 100% Transport etc 33.90 61.02 5.08 100% Finance etc 25.42 74.58 0.00 100% Services 25.00 75.00 0.00 100%

Are you generally more optimistic about business growth this year compared to 2016? (January 2017) Not Yes No sure/don t All Firms 405 61.32 23.70 15.06 100% Manufacturers 61.82 27.27 10.91 100% Wholesale 75.86 13.79 10.34 100% Retail 60.34 22.41 17.24 100% Construction 59.68 24.19 16.13 100% Transport etc 56.90 25.86 17.24 100% Finance etc 63.79 20.69 15.52 100% Services 50.00 32.14 17.86 100% (December 2016) Not Yes No sure/don t All Firms 413 55.21 27.60 17.19 100% Manufacturers 63.33 21.67 15.00 100% Wholesale 54.24 28.81 16.95 100% Retail 54.24 27.12 18.64 100% Construction 41.38 36.66 18.97 100% Transport etc 67.24 10.34 22.41 100% Finance etc 59.90 29.31 13.79 100% Services 49.18 36.07 14.75 100% (November 2016) Not Yes No sure/don t All Firms 412 50.24 29.37 20.39 100% Manufacturers 32.76 44.83 22.41 100% Wholesale 50.82 27.87 21.31 100% Retail 61.02 23.73 15.25 100% Construction 55.17 27.59 17.24 100% Transport etc 59.32 23.73 16.95 100% Finance etc 40.68 33.90 25.42 100% Services 57.72 24.14 24.14 100%

If you find yourself unable to pay all of your bills, which of the following would you choose to pay late/miss? (January 2017) Phone Internet Utilities Suppliers Rent/m ortgage Business loan/ overdraft Business credit card All Firms 265 8.30 4.53 7.55 34.34 6.79 16.60 21.89 100% Manufacturers 6.98 6.98 4.65 34.88 6.98 18.6 20.93 100% Wholesale 12.12 3.03 6.06 36.36 9.09 15.15 18.18 100% Retail 5.26 5.26 10.53 39.47 0.00 7.89 31.58 100% Construction 11.90 0.00 2.38 40.48 7.14 11.90 26.19 100% Transport etc 6.98 6.98 11.63 32.56 6.98 16.28 18.60 100% Finance etc 8.00 0.00 16.00 32.00 16.00 20.00 8.00 100% Services 7.32 7.32 4.88 24.39 4.88 26.83 24.39 100% (December 2016) Phone Internet Utilities Suppliers Rent/m ortgage Business loan/ overdraft Business credit card All Firms 264 3.41 4.92 8.33 30.30 11.36 19.70 21.97 100% Manufacturers 0.00 2.44 9.76 51.22 12.20 9.76 14.63 100% Wholesale 8.33 8.33 5.56 22.22 2.78 25.00 27.78 100% Retail 5.56 5.56 2.78 22.22 11.11 22.22 30.56 100% Construction 2.56 10.26 2.56 33.33 10.26 25.64 15.38 100% Transport etc 2.33 4.65 16.28 34.88 11.63 13.95 16.28 100% Finance etc 6.45 3.23 16.13 22.58 9.68 22.58 19.35 100% Services 0.00 0.00 5.26 21.05 21.05 21.05 31.58 100% (November 2016) Phone Internet Utilities Suppliers Rent/m ortgage Business loan/ overdraft Business credit card All Firms 267 6.74 3.75 6.37 34.83 11.99 16.10 20.2 100% Manufacturers 0.00 0.00 8.11 27.03 27.03 18.92 18.92 100% Wholesale 7.50 2.50 7.50 45.00 12.50 10.00 15.00 100% Retail 13.33 4.44 4.44 40.00 8.89 11.11 17.78 100% Construction 10.53 2.63 5.26 42.11 5.26 18.42 15.79 100% Transport etc 8.11 5.41 5.41 37.84 5.41 21.62 16.22 100% Finance etc 6.25 9.38 12.50 21.88 15.63 12.50 21.88 100% Services 0.00 2.63 2.63 26.32 10.53 21.05 36.84 100%

What impact will the results of the US federal election have on your business? (January 2017) Not Positive Negative No impact sure/don t All Firms 409 9.78 8.56 63.81 17.85 100% Manufacturers 6.90 6.90 67.24 18.97 100% Wholesale 12.07 10.34 44.83 31.76 100% Retail 8.62 8.62 68.97 13.79 100% Construction 9.68 11.29 70.97 8.06 100% Transport etc 8.62 12.07 62.07 17.24 100% Finance etc 12.28 5.26 56.14 26.32 100% Services 10.34 5.17 75.86 8.62 100% (December 2016) Not Positive Negative No impact sure/don t All Firms 411 6.57 8.27 70.32 14.84 100% Manufacturers 1.69 10.17 79.66 8.47 100% Wholesale 5.08 5.08 66.10 23.73 100% Retail 3.45 5.17 74.14 17.24 100% Construction 5.17 3.45 79.31 12.07 100% Transport etc 8.62 6.90 67.24 17.24 100% Finance etc 13.79 18.97 58.62 8.62 100% Services 8.20 8.20 67.21 16.39 100%