Positive outlook for 2010

Australian firms are expecting a positive start to the New Year with higher expectations for sales, profits, capital investments and inventory levels.

Australian firms are expecting a positive start to the New Year with higher expectations for sales, profits, capital investments and inventory levels.

Findings from the latest D&B Business Expectations Survey, which looks at expectations from the March quarter following the Christmas trading period, show 12 per cent of firms surveyed expect to increase their capital investment in 2010.

Durables manufacturers have experienced the most significant increase in expectations with 17 per cent of firms expecting to increase stock levels in the March quarter. Sales and profit outlooks have also improved.

Inventory expectations have reached their highest level in six years and 19 per cent of surveyed executives expect to increase inventories in the March 2010 quarter.

According to Dun & Bradstreet’s CEO Christine Christian, the continued improvement in capital investment expectations is an important sign for the recovery of the Australian business environment.

“Capital investment is crucial to Australian businesses being able to meet customer demand and return to economic prosperity in 2010. With the capital investment index remaining in positive territory for the second consecutive quarter this shows a dramatic improvement from the all time low reached in the June quarter of 2009,” said Christian.

In perhaps the only concerning indicator, employment expectations have deteriorated slightly as firms deal with rising wages costs and interest rate rises.

A mere six percent of firms plan to increase staff levels and seven percent to reduce employment numbers.

These expectations will need to improve in order to reach the Federal Government’s expected unemployment forecast of 6.75 percent for mid 2010, down from the May budget forecast of 8.5 percent.