Sales expectations hit pre-GFC high: Report

The sales expectations of Australian businesses have hit an eight-year high, with expected interest rate reductions boosting confidence, according to a new study.

The latest Dun & Bradstreet survey of the manufacturing, retail and wholesale sectors shows that preliminary expectations for the June quarter are strong, with a balance of +21 in terms of sales and a +8 forecast for profits.

Sales forecasts are now at their highest level since the December quarter in 2003, while investment expectations have hit a peak not seen since December 2010.

The survey of 1,200 businesses reveals strengthening confidence in most areas, although employment expectations are still downbeat, stand just two points above the 10-year average.

Meanwhile, nearly a third of those polled expect to increase cash reserves during the June quarter, while two-thirds anticipated that they will avoid taking on new lines of credit.

The caution also extends to Australia’s currency, with concern over the strong dollar rising from 11% to 27% over the past year.

However, the overall picture suggests that many businesses expect an improvement in conditions in 2012, especially given the anticipated interest rate cut by the Reserve Bank later on today.

The news is particularly encouraging given the release of figures yesterday that showed that retailers endured a poor Christmas period, with sales dipping 0.1% in December compared to a year earlier.

Christine Christian, CEO of Dun & Bradstreet, says: “Historically, leading indicators of financial stability, such as cashflow, have improved during the June quarter as firms gain momentum.”

“We are also no doubt seeing businesses increasingly factoring in the impact of further interest rate reductions on their operations.”

“Despite the general improvement in business expectations some caution was still evident through measures of credit growth across a majority of sectors.”