Weak Aussie Dollar
“While there has undoubtedly been a benefit for sections of the economy, such as manufacturers, the weaker dollar has introduced new cost pressures for businesses and industries that are reliant on imported goods.
“To cover these costs, many operations will be forced to lift their own prices, which will in turn flow through to other businesses and consumers alike,” says Gareth.
Overall the weakening dollar has dampened the Australian business community’s optimism for improved growth prospects. The survey found that only 65 per cent expected better growth this year than last, compared to 68 per cent at the beginning of 2014 and 74 per cent the previous quarter.
However, amid the gloom there were still some bright spots.
While businesses were less optimistic about their growth prospects for the coming year they remained positive around key economic indicators.
“Many operations will be forced to lift their own prices.”
Both profit and hiring expectations among Australian businesses were more positive compared to last year and sales expectations also showed improvement.
Dun & Bradstreet’s employment index reached 16.1 points for the quarter compared to 8.8 points in the corresponding quarter for 2014. Its profit index was marginally higher at 25.9 points compared to 25 points for the March 2014 quarter.
Similarly, the sales expectations index reached 38.7 points compared to 27.5 points a year ago.
Dun & Bradstreet economic advisor Stephen Koukoulas said that overall businesses were showing signs of being more upbeat than last year.
“While expectations for future profits have cooled in light of recent negative news on the economy, there are also positives to be found in the gradually improving picture for business spending and hiring, which fits with recent assessments from the Reserve Bank of Australia and The Treasury.
“Low borrowing rates, cheaper fuel and an improving US economy, meanwhile, provide additional cause for optimism,” says Stephen.
Dun & Bradstreet said that businesses should avoid the temptation to increase prices and seek out efficiencies instead.