Australian businesses remain cautious about the outlook for Christmas amid expectations of slowing demand and greater economic uncertainty.
According to the Dun & Bradstreet Business Expectations Survey for the December quarter, firms are keeping expectations for the holiday period firmly in check with more than 50 per cent of firms anticipating demand to slow over the next 12 months.
Dun & Bradstreet CEO, Christine Christian, said the December projections are significantly below where they were at this time last year.
"It's clear that global economic uncertainty is affecting the confidence of business and consumers alike with knock-on effects for anticipated sales, profit and employment growth," Ms Christian said.
The Business Expectations Survey shows that for the upcoming December quarter:
- Sales Expectations over the last two months are at their lowest levels in over two years having fallen more than 23 points over the last four quarters. Expectations are particularly weak for durables manufacturing (down 9 points).
- Employment Expectations have recovered from the first negative index in two years but are still seven points below last year with significant staff reductions expected in the retail sector.
- Profit Expectations have also recovered from the first negative index in two years but remain more than 20 points below this time last year. Observed actual results remain in negative territory.
- Investment and Inventory Expectations appear to have arrested their recent rapid decline but remain more than 10 points below where they were a year ago.
Negative outlook among retailers is a reflection of the industry's actual performance in the June quarter. Significant declines were recorded in the second quarter across sales (-3) and profits (-10), forcing stores to shed employees (-2). This is anticipated to continue through December, with profits trending down and prompting retailers to slash staff numbers over what should be a period of peak productivity.
"Australian consumers are now saving at levels not seen since the 1980s. Retailers, not surprisingly, are experiencing one of their worst years. Retailers seem to have given up hope that conditions will improve this side of Christmas," Ms Christian said.
"There is an acute awareness in the industry that retailers cannot count on the usual flurry of Christmas spending to push them over the line, as they might have done in the past. This is a real concern for many businesses as Christmas is such a key time for discretionary spending and most rely on the period to kick start them into the New Year."
Click here to read the full report.
Source: Dun & Bradstreet Australia