Finance Finance News Business expectations at a one-year high

Business expectations at a one-year high

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Australian businesses are more optimistic about growth in 2014, a survey shows.
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The majority of Australian businesses are more upbeat about growth in 2014 than they were last year, with business expectations rising to a one-year high.

First quarter expectations for sales, profits, selling prices, investment and employment reached their highest levels in 12 months, the latest Dun & Bradstreet Business Expectations Survey shows.

The survey showed that 68 per cent of businesses were more optimistic about growth this year compared to last year, with 18 per cent of them planning to access new finance in the next three months to grow their operations.

Employment expectations rose to a three-year high with 15 per cent of businesses saying they intended to hire more staff.

“The new year is starting with business expectations at very optimistic levels,” Dun & Bradstreet economic adviser Stephen Koukoulas said.

“The employment outlook has also improved markedly, suggesting that the unemployment rate may soon start to fall as job creation picks up.”

But the expected lift in business conditions means rising prices for consumers, with 24 per cent of businesses planning to raise the prices of their products and services during the first quarter, the survey showed.

This means interest rates could begin to rise this year, Mr Koukoulas said.

“If there is one cloud on the horizon, it is the expected lift in selling prices,” he said.

“A stronger economy is no doubt allowing firms to move their prices higher, but we are also seeing the impact on inflation from the recent weakness of the Australian dollar.

“This is likely to cause the Reserve Bank some concern and is a fundamental factor why we are likely to see a series of interest rate rises during 2014.”

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