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Businesses lower Christmas expectations

Consumers are saving at levels not seen since the 1980’s, leading the retail sector to brace for a dismal Christmas. In the current climate of lingering economic uncertainty, businesses are feeling increasingly cautious about the traditionally anticipated holiday boon.

According to the Dun & Bradstreet Business Expectations Survey for the December quarter, firms are keeping expectations for the holiday period firmly in check with more than half anticipating demand to slow in the next 12 months.

“It’s clear that global economic uncertainty is affecting the confidence of business and consumers alike with knock-on effects for anticipated sales, profit and employment growth,” Dun & Bradstreet CEO Christine Christian said.

She noted that the December projections are significantly below last year’s numbers. Furthermore, less than 20 percent of firms plan to seek finance or credit to grow their business in the coming months.

The negative outlook is part of the continuing downwards trend from the June quarter. Retailers are experiencing one of their worst years and seem to have given up expectations for conditions to improve this side of Christmas, including slashing staff numbers at a time where there should be peak productivity. In the December quarter, 13 percent of firms increased staff while 11 percent reduced employee numbers.

“There is an acute awareness in the industry that retailers cannot count on the usual flurry of Christmas spending to push them over the line, as they might have done in the past. This is a real concern for many businesses as Christmas is such a key time for discretionary spending and most rely on the period to kick start them into the New Yea.r”

The study also revealed that the last three years have seen Australian households increase their dispensable income saving ratio to 17-18 percent from the average 8 percent saved in the years 2003-2005.

“This recent higher saving level has been accompanied by a very flat trajectory in retail spending. The latest D&B survey shows that the retailing sector is in the greatest difficulty with negative expectations for both profits and employment for the December quarter,” Dun & Bradstreet’s economic consultant Dr Duncan Ironmonger said.

Frances Mao

Frances Mao

Frances is a journalism and law student at the University of Technology in Sydney, and one of Dynamic Business' hard-working interns

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