Australian firms optimistic about recovery: reports

by Adam Smith11 Aug 2009

Australian firms are substantially more optimistic now than in the previous quarter, according to Dun & Bradstreet's latest Business Expectations Survey.

However, B&D expected trading conditions to be challenging still as cash flow constraints, a high debt interest burden and tightened credit criteria continue to weigh the economy down. 

Expectations for sales, profits, employment, inventories and capital investment were all back in positive territory for this quarter, with some indices making the greatest one-quarter change since the survey began more than 20 years ago. 

In particular, the sales and profit indices showed their largest ever rises - up 46% and 31% respectively. 

In the retail sector expectations were at a five year high, with 25% of businesses expected to increase stock levels.
Capital investment expectations also entered positive territory, with 17% of firms expected to increase investment. 

Expectations for employment made a large upward movement, with 15% of executives indicating they expected to increase staff. 

While these results indicated a belief by many Australian executives that the economy was on the road to recovery, Dun & Bradstreet's CEO Christine Christian warned against a premature relaxing of business fundamentals.

"Further challenges do lie ahead. D&B expects the trading environment to remain difficult," she said.

Meanwhile, the Australian Industry Group / American Express report Looking Towards the Upturn backed up the D&B findings.

It found that one in six of the businesses it surveyed believed improved business conditions were already underway - while more than half expected this to be the case by the first quarter in 2010.

"The survey underlines the resilience of Australian businesses who are trying to look ahead and plan for growth despite the continuing toughness of business conditions," said Australian Industry Group's chief executive Heather Ridout.

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