D&B Australasia Expectations Survey Looking Down for Australia

As 2007 begins, Australian business has poor expectations for the March quarter, with inflationary pressure set to remain and both the sales and profits outlook continuing in a negative direction. According to the latest Dun & Bradstreet (D&B) Business Expectations Survey, this comes as almost one third of all firms say they are being affected by the worsening drought.

The December survey, released today, reveals that over half (52%) of business executives expect to further raise their selling prices in the March quarter 2007. More than one third (37%) of business executives expect to see a decrease in profits this quarter compared with March quarter 2006.

This environment is being further complicated by the most severe drought in 100 years, which has already affected real economic growth through a drop in Australian farm output. In December the Federal government slashed its growth estimates by 0.75% from 3.25% to 2.5% for the current financial year.

D&B Economic Consultant, Dr Duncan Ironmonger, said that drought effects had already flowed through to non-farm sectors. "The D&B Business Expectations survey for December shows that almost a third (31%) of firms surveyed in manufacturing, wholesale and retail industries already had had a negative impact from the drought on their business," Dr Ironmonger said.

Despite fuel prices remaining the key concern for Australian business executives, there has been a noticeable decline in its level of importance compared to previous months. In December only 42% expect fuel prices to have the most significant impact on business operations in the 2007 calendar year. Almost one in five (19%) executives expects wages and salary growth to be the most significant cause for concern. One in six (17%) executives think interest rates will influence their business the most in 2007.