As slow wage growth and lacklustre GDP figures weigh on the economy, expectations for sales, profits and capital investment are down for the third quarter of 2017 according to Dun & Bradstreet’s June Business Expectations Survey. Upbeat employment and selling prices expectations provide some positive news, but the forecast is for choppy waters ahead.
Stephen Koukoulas, Dun & Bradstreet Economic Adviser said the overall cautious tone of business expectations remains, with the final result confirming lower confidence for the September quarter.
“Actual activity also remained soft and lags well behind expectations. The on-going weakness in the economy, confirmed by the recent national accounts for the March quarter, has been forecast by the D&B Business Expectations Survey in recent months and, on current measures, the economy is expected to remain on a moderate growth trajectory into the second half of 2017.”
Results confirm weak start to 2017
Business activity in the March quarter fell 37%, with sales, profits and capital investment down significantly, despite a significant boost in employment on the previous year. The Business Actuals Index was lower across all sectors, with Retail and Manufacturing the hardest hit.
“The components of the survey are providing a leading indicator on the hard data for the economy, particularly the apparent conflict between a downturn in sales and the rise in employment,” Mr Koukoulas said.
Outlook bleak for sales, profits and capex
Expectations for sales, profits, and capital investment were down for the September quarter compared to the June quarter. Expectations for selling prices are up, while the outlook for employment also improved quarter-on-quarter.
Mr Koukoulas said the consistent fall in expectations for sales, profits and capital expenditure is concerning.
“If these trends are reflected in future data, the outlook for the economy will be problematic and it may cause the Reserve Bank of Australia to revisit its upbeat view on future growth.”