Businesses are attempting to curb their expenses by delaying investments and the hiring of new staff, according to the latest Dun & Bradstreet survey, which shows 75% of businesses see cashflow as an issue during the months ahead.
D&B’s latest National Business Expectations Survey shows the cost of doing business is taking its toll, with businesses delaying plans to hire new staff and putting off investments.
The survey’s index has continued a downward trend through to the June 2013 quarter, falling below its 10-year average level, to a score of zero.
The research also shows no new jobs have been added since the March quarter of 2012, with the actual employment index remaining in negative territory for three consecutive quarters.
In December last year, the index dropped to -7. This was its lowest point in more than three years.
The survey shows 75% of businesses see cashflow as an issue during the months ahead, with 44% of businesses identifying operational costs as their biggest barrier.
Danielle Woods, Dun & Bradstreet director of corporate affairs, told StartupSmart she’s not surprised by the findings.
“To be fair, we’ve seen this real downward trend in sentiment in recent months. The six indices we look at are trending down, so the cashflow issue is not a surprise to me,” Woods says.
“Trade credit is a huge thing for businesses in Australia… Our analysis is showing [trade payment times are] still sitting at 52 days.
“When businesses are taking 52 days, that can be a real strain on another firm’s cashflow.
“With these conditions prevailing, it’s unsurprising to see the outlook for both employment and investment falling away.”
Investment expectations for the June 2013 quarter dropped sharply to an index of five, compared to 14 in the previous quarter.
The outlook for capital spending is now at its lowest level since the September 2011 quarter, while the actual index for the December 2012 quarter is -3.
The outlook for sales has declined for the second consecutive quarter, while expectations for selling prices continues to move lower – the index decreased to two for the June 2013 quarter, well under its 10-year average of 29 points.
The broad fall in expectations suggests operating conditions will remain difficult at least until the middle of this year, with businesses also finding little relief in their cashflow position.
“The current and future challenges for businesses continue to come from a sluggish economy, Woods said.
“Sales growth is weak, businesses face challenging operating conditions and consumer spending is soft.
“We can expect businesses to keep a tight check on their expenses and continue to delay larger investments such as new jobs.”
D&B’s findings are in stark contrast to the latest MYOB research, which shows economic confidence and the overall business outlook of SMEs is on the rise.
According to the March 2013 MYOB Business Monitor, 26% of SMEs expect the domestic economy to improve within 12 months, compared to 19% in the July 2012 report.
The report, which is based on a study of 1,005 business owners and managers, shows 30% of respondents anticipate a revenue rise this year while 42% expect revenue to be stable.
According to MYOB chief executive Tim Reed, hope is “springing back for Australia’s business coalface”.
