Businesses brace for horror first quarter

Business owners and managers are bunkering down for a tough start to the year, with a new survey from Dun & Bradstreet showing 54% of firms expecting sales to fall and 59% bracing for a fall in profits.

Business owners and managers are bunkering down for a tough start to the year, with a new survey from Dun & Bradstreet showing 54% of firms expecting sales to fall and 59% bracing for a fall in profits.

While falling consumer spending, tighter credit conditions and the cost of fuel are buffeting businesses, the rapid deprecation of the Australian dollar is also making life tough. More than 70% of companies say they have been negatively affected by the dollar’s slide, an increase of 60% since July.

Some of the pain of the falling dollar is set to be passed on to consumers, with almost 80% of firms set to raise their selling prices in the March quarter.

There are some bright spots for businesses, including the sharp fall in petrol prices and lower interest rates, although 43% of firms said tight credit markets were having a negative impact on their business.

In worrying signs for the wider economy, 20% of firms expect to have less staff than in March 2008 and 10% of firms are planning to cut capital expenditure.

D&B chief executive Christine Christian expects corporate activity and investment will remain depressed in 2009.

“Executives will be hoping that the loosening in monetary policy, Government measures to address the financial crisis and the post Christmas sales will encourage spending throughout 2009,” she says. “However regardless of the outcome of these measures, business activity will remain depressed.”

Related stories:

• Business confidence halves in three months