Company profit expectations have reached their highest level since
2003, with Australian businesses anticipating a jump in takings in
the New Year on the back of stronger sales and firming selling
Continuing initial positive forecasts for the lead-up to Christmas,
Dun & Bradstreet's Business Expectations Survey shows that 36
per cent of companies expect to increase their earnings during Q1
2014. This response has taken the survey's profits index to a
10-year high of 34.9 points, up from 21.1 in the previous quarter
and 22.9 at the same time last year.
After remaining downbeat through much of 2013, the business outlook
appears to have turned a corner, with profit and sales expectations
lifting for consecutive quarters, whilst employment and investment
intentions have stabilised.
The sales expectations index for the first quarter of the New Year
has risen to 13.9 points, its highest level in 12-months, with 16
per cent of businesses anticipating increased activity while just
two per cent expect weaker trade.
Further supporting healthier profit margins, 18 per cent of
businesses plan to raise the prices of their goods and services in
Q1 2014, compared to just two per cent that will discount. This
result has taken D&B's selling prices index up to 15.6 points,
its highest level since mid-2012. With official figures showing
that the underlying rate of inflation increased at an annual rate
of 2.8 per cent in the September quarter this year, which was above
expectations, policymakers will be watchful for future gains in the
selling prices index.