Sales expectations soar

Fourth quarter outlook for increased sales at 11-year high
5 August 2014

After stalling over the past three months, the outlook for sales has risen to the highest level since 2003, with 46 per cent of businesses expecting increased activity in the fourth quarter of the year while nine per cent anticipate fewer sales and the majority no change.

The upbeat response to Dun & Bradstreet's monthly Business Expectations Survey has taken the sales index to 36.6 points, well above its 10-year average of 13.08 points and a breakout from the relatively flat movements in the survey's other measures of profits, employment, capital investment and selling price expectations.

BEX - Q4 2014 - prelim chart 1

The sharp lift in the sales index has been driven by a particularly positive outlook from the services sector, of which 63 per cent expect increased selling during Q4 2014 while 11 per cent are anticipating a decline. This response has seen the services industry sales index jump to 52.5 points, up from just 4.0 points last year.

The transportation, utilities and construction sector has also returned a healthy response for sales in the fourth quarter with an index of 45.4 points, up from 8.1 points in Q4 2013. Meanwhile, retailers have shrugged off a recent run of poor activity recorded by the ABS to lift their sales expectations index to 32.9 points, up from 9.7 points.

Although ahead of last year's figures, on a quarterly basis manufacturers, wholesalers, and businesses in finance, insurance and real estate have lowered their outlook for sales activity.

BEX - Q4 2014 - prelim chart 2

"These findings on December quarter expectations have continued the generally positive trend we've been seeing since the end of 2013," said Gareth Jones, CEO of Dun & Bradstreet-Australia and New Zealand.

"While there has been a recent pullback in the profits and capital investment indices, there's a clear upward trend developing this year and all of the survey's measures are above their 2013 level.

"The sales outlook is particularly solid through to the end of the year, providing encouragement for those businesses concerned that the Federal Budget had knocked the wind out of consumer confidence and spending," Mr Jones added.

According to D&B, two-in-three businesses are generally more optimistic about increased growth in the months ahead, a level that has been maintained for most of this year. Confidence at local levels, however, is varied when considered against other parts of the country.

When asked to rate their local conditions compared with other states and territories, businesses in Tasmania were particularly downbeat, with the most common response being 'very bad' (39 per cent), while just eight per cent responded with 'very good'.

Despite the relative strength of the Western Australian economy, the majority of businesses operating in the west consider conditions as 'average' when compared to other locations.

Most positive about local conditions are businesses in the Australian Capital Territory, with 38 per cent rating the ACT as 'good' and one-in-four 'very good'. No respondents considered the local scene as 'very bad'.

BEX - Q4 2014 - prelim chart 3

"The surge in expected sales bodes well for economic growth over the latter part of this year, while the continued resilience in the outlook for employment suggests that the pace of job creation will move to a point where the unemployment rate edges lower over the next couple of quarters," said Stephen Koukoulas, Economic Advisor to Dun & Bradstreet.

"The dip in expected selling prices indicates that the inflation rate probably peaked in the June quarter and will ease to the middle of the RBA's two-to-three per cent target band," Mr Koukoulas added.

"While expected capital expenditure and profits expectations are broadly flat, they remain well above the level of 2013 and fit with an overall picture of solid, if not spectacular, growth in the economy."

Connect with us to receive updates throughout the day:

Like us on Facebok Follow us on Twitter

Dun and Bradstreet AustraliaTop of page Dun & Bradstreet Australia Pty Ltd 2015 | D&B Small Business    *About Us    *Sitemap    *Advertise    *Privacy    *Terms & Conditions