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Business downbeat about end of year

Business

Australian businesses are pessimistic about the next three months as market turmoil and an upcoming federal election drags on spirits.

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Businesses expect sales, profits, employment and capital investment to decline in the last quarter of the financial year compared to the previous quarter, according to Dun and Bradstreet’s (D&B) latest business expectations survey.

Expectations for all those areas are at their lowest point in about two years.

“It is likely that the global financial market ructions in the early part of 2016 and now the policy uncertainty associated with the upcoming election could be dampening the spirits of the business sector,” Stephen Koukoulas, economic adviser to Dun & Bradstreet said.

In particular, profit expectations were at their lowest point since 2012, while sales and employment forecasts also slumped. Investment has also slipped.

The services sector was most downbeat, predicting sales to more than halve in the three months to June.

Dun & Bradstreet’s head of group development, Adam Siddique said local business disasters such as the collapse of Dick Smith were adding to the dismal mood.

“We aren’t ringing the alarm bells yet, however, several recent high profile corporate administrations and profit downgraders appear to be weighing on business sentiment leading into the end of the financial year,” he said.

More than a third of businesses also reported having a customer or supplier that had become insolvent and was unable to pay them in the past year.

Businesses identified consumer confidence as the key factor influencing trade in the next quarter, while the Australian dollar was also cited.

A quarter of businesses want a higher Australian dollar, 18.5 per cent want the currency to sink lower and more than than half don’t care.

Four hundred business owners and senior executives from a range of industries including manufacturing, retail, finance and real estate, took part in the February survey.

AAP

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