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Rate concerns cause business expectations to slump

Business and sales expectations have again fallen on the back of interest rate rise fears, according to new Dun & Bradstreet figures, which also revealed Australia’s employment outlook has slipped to an index of -5.

According to the latest Dun & Bradstreet (D&B) Business Expectations Survey, the local employment outlook has dipped into negative territory figures. The survey of 1200 business owners and senior executives found employment expectations have fallen two points to an index of -5, the second negative in nine quarters.

The fear of interest rates remains the principle reason behind the business expectations slump, with 32 percent of executives ranking interest rates as the primary influence on their business. Sales expectations have also dipped, decreasing by two points to an index of eight.

D&B CEO Christine Christian said the data reflects the challenges business owners continue to face.

“Retailers expect sales to remain weak as ongoing discounting campaigns by brick-and-mortar traders prove no match for the rising cost of living and subsequent anticipated rate rises.”

This expectation of continuing weak sales will see businesses likely to maintain profit levels by implementing cost cutting measures. The survey reveals profit expectations for the December quarter have risen five points, but still remain three points below the 10-year average.

“While rising profit expectations offer some hope the reality is that this will be driven by reduced costs, particularly in regard to labour costs,” she said. “With executives expecting to increase selling prices towards Christmas, the strain on consumers can only worsen and businesses in these key areas of the economy may see a noticeable drop in demand.”

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