Business Mood In Sharp Decline
The Age
Tuesday November 14, 2000
Business confidence is sliding downhill at a faster rate than was experienced before the 1991 recession.
The Dun & Bradstreet national business expectations survey showed that the rate of decline since January across all indexes - including employment, capital investment and profitability - is almost twice as steep as at any other time since the first survey in 1988.
The indexes plummeted by an average annual rate of 42 points, compared with an average 26-point-per-year fall leading up to the 1991 recession.
Sales expectations fell 16 points in October, reaching their lowest level since 1991.
Employment expectations slumped, hitting a five-year low with only a net 3 per cent of employers looking to hire staff next quarter. A net 15 per cent of executives expected an increase in profits, well down from the 54 per cent expecting bigger profits back in January. Only 15 per cent were enjoying actual profit increases, compared with 44 per cent in February.
In line with the growing pessimism, fewer businesses were now stocking up. Those expecting an increase in inventories was now zero per cent.
Capital investment expectations dropped seven points to 7 per cent, the weakest since 1994.
Dun & Bradstreet managing director for Australia and New Zealand, Christine Christian, said the survey highlighted the growing uncertainty for business in the immediate future. ``The about-face in business optimism that became evident in September is now in freefall," Ms Christian said.
``Concerns over GST compliance, the weak Australian dollar, interest-rate uncertainty and the high cost of fuel have all taken their toll on confidence. It would also seem that businesses have experienced a cash-flow squeeze and are now playing GST catch-up."
``This, together with the fact that all indicators now point toward a possible recession, means the outlook for small business in particular is far from rosy."
The survey revealed that more executives had suddenly realised they weren't ready to meet last Saturday's first quarterly Business Activity Statement (BAS) deadline.
Only 67 per cent were ``completely confident" of meeting the deadline, well down on the 83 per cent who were saying this back in September. And 63 per cent said they had prepared all the information required for their BAS, down from 84 per cent.
© 2000 The Age
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