Optimism returning for businesses

by Adam Smith01 Nov 2011

Businesses are showing signs of optimism following months of gloom over the state of the economy.

Dunn & Bradstreet's newest Business Expectations Survey has indicated buusinesses are becoming more confident following a better-than-expected September quarter and the growing possibility of an RBA rate cut. The company said firms were predicting a pick-up in performance for sales, profits, employment and investment for the first quarter of 2012.

The survey also showed a 25% decline in the number of firms anticipating being impacted by interest rates. Dunn & Bradstreet CEO Christine Christian said the increasing talk of RBA rate cuts has bolstered confidence, particularly among small businesses.

"Growing positive sentiment and a renewed interest in hiring staff and increasing investment amongst Australian firms indicates a refocus of efforts on growth rather than just survival – if only in the short term," she said.

The survey found that sales and employment expectations are now at their highest level in 12 months. Profit expectations have continued to recover after posting negative results earlier in the year, but are still 20 points below the same time last year. The outlook for selling prices was 16 points below the long-range average, echoing CPI figures indicating flat or falling prices for discretionary consumer goods.

"It would appear that retailers and manufacturers are unlikely to significantly raise prices any time soon, in part because the higher exchange rate is restricting their capacity to raise prices," Christian said.

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