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Business expectations ‘lackluster’ in new financial year

Expectations amongst business owners and executives for the new financial year are lackluster at best, with six key indicators of business strength declining
since the previous quarter.

business expectationsThe latest Dun & Bradstreet Business Expectations Survey reveals that the sales, profits, employment, capital investment, inventories and selling prices indices have all fallen since the previous quarter.

According to Dun & Bradstreet’s CEO Christine Christian, executives are indicating that business conditions in the New Financial Year won’t be as buoyant as previously expected.

“Six key indicators of business strength have taken a tumble since the previous quarter, with the sales indicator in particular taking a significant dive,” said Ms Christian.

“It is important that executives take steps to address these issues now – it is also important they take a long term approach to business management and growth. The nation’s GDP figures for the March quarter were lower than anticipated and if firms pull back their investment now we could find economic growth even more difficult in the years ahead.

“Firms that seek to retain funds in the short term at the expense of investing in their business run the risk of long term stagnation. If this trend becomes widespread within the Australian business community it could have significant consequences for the nation’s long term growth prospects.”

Dr Duncan Ironmonger, Dun & Bradstreet’s economic consultant believes the latest survey merely illustrates the exuberance accompanying the second, third and fourth quarters of the financial year has given way to more modest expectations for the start of the new financial year.

“Expectations for growth in sales are much weaker, particularly for retailers. The latest Australian Bureau of Statistics retail trade data up to May 2010 reveal a static growth trend of only 0.2 per cent per month in each of the six months since November 2009. Low actual growth in retail sales is obviously affecting expectations,” said Dr Ironmonger.