No post-election glow for Australian businesses – survey shows optimism flat for final quarter

The forthcoming conclusion to the federal election has done nothing to brighten the outlook for Australian businesses, with expectations flat for the final quarter of 2013, new research shows.

The Dun & Bradstreet Business Expectations Survey concludes a year of low business optimism, in which its quarterly research has shown business expectations for sales, employment and investments all reached their lowest levels in three years.

Only 5% of respondents to the latest survey were optimistic about increased business growth in the final quarter. The services and wholesale sectors were the least optimistic, with just 2% of respondents expecting growth.

Manufacturing businesses were most optimistic about the period, with 10% upbeat.

The survey showed that the sales index slid from 4.5 points to 3.5. The number of businesses anticipating increased sales activity dropped from 18% in the third quarter of this year, to 11%.

Sales expectations were lowest in the construction sector, with the index falling from 13.3 points in the third quarter to -1.1. Only 3% of construction firms anticipated higher sales for the final quarter, down from 26% in the third quarter. Just 7% of service business anticipated stronger sales, down from 21% in the third quarter.

Employment prospects remained flat, with only 3% of companies intending to hire new staff in the period.

Not surprisingly, 45% of businesses view operating costs as their biggest barrier to growth in the year ahead, and 64% anticipate that cash flow will be an issue.

The majority of businesses did not expect that the drop in the Australian dollar would impact them, with 57% of businesses expecting no impact, and 12% expecting a small positive impact.

Dun & Bradstreet chief executive Gareth Jones told SmartCompany this morning that he felt business confidence was shaky due to the unknown results of the federal election.

“People need (political) clarity for confidence,” he says. “They are concerned for a hung outcome, and that makes people nervous.

“A clear result could be a boost of confidence”.

He says many businesses are “sitting on investments” until they know what policies will be in place.

Jones says the issues of cashflow and operating costs impacting businesses had been prominent all year. As a result, he felt the final quarter would see businesses “get their house in order”, with a continued focus on paying off debt.

Jones says 2014 could bring a rise in business confidence. The lower Australian dollar, lower interest rates and political certainly should aid an upswing, he says.

Dun & Bradstreet surveyed 800 businesses in July and August this year to obtain the results.