Bleaker picture for the coming quarter

A latest business expectations survey has painted a bleaker outlook for the December quarter, with sales and profits growth expectations projected to fall further affected by the continuing high oil prices.

The survey, released by Dun & Bradstreet (D&B), indicates all indexes except selling prices will remain in negative territory for the second consecutive quarter, with 47 per cent of executives rate petrol prices as their primary concern, climbing to the highest level in 16 months.

In the June quarter, 43 per cent of businesses experienced declining sales and almost half of executives anticipate further decline in sales in the quarter ahead. The actual sales index for retailers has been hit the hardest, falling 52 points from the December 2007 to the June quarter.

The report also shows a similar picture illustrated by profits expectations, with 50 per cent of executives anticipating a decline in profits in the December quarter. 13 per cent of executives expect a decrease in capital investment, while just seven per cent anticipate an uplift.

D&B’s CEO Christine Christian said business confidence has fallen away dramatically as the economy continues to slow.

“The expectation of business executives have continued to fall, with sales and profits expectations particularly hard hit,” she said.

“These indices have fallen for two consecutive quarters, a trend driven largely by declining sales and profits results and continually escalating business costs.”

Meanwhile fuel prices continue to exert a detrimental impact on operations with nine in ten executives reporting that fuel costs are hurting their business, a 28 per cent increase since March.

The situation is expected to worsen, as 47 per cent of executives rate the cost of fuel as the most important influence on operations in the coming quarter.

“With the economy expected to slow further at least in the short term, businesses need to be particularly diligent about managing their operations to ensure they remain financially stable throughout the challenging conditions,” Ms Christian said.

MREC HERE

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