Business predicts mixed bag into 2016

06-Business predicts mixed bag into 2016

(Australian Associated Press)

Australian businesses plan to increase capital investment in 2016 despite having downbeat expectations for their bottom line.

The general outlook for the business sector remains “relatively muted”, with lower expectations for sales, profits and employment for the first quarter of 2016 compared to the final three months of 2015, the latest Dun & Bradstreet business expectations survey found.

However, the investment outlook has taken a positive turn, with the Capital Investment Index up to 12.6 points, compared to 11.9 points in the December quarter.

Some 23.1 per cent of businesses intend to increase spending on capital investment in the first quarter of 2016 compared to the fourth quarter of 2015, the survey found.

The intention to increase investment continues recent trends, with capital investment rising in the June and September quarters.

Economic advisor to Dun & Bradstreet Stephen Koukoulas says the overall tone of the business sector has faded into the start of 2016.

“The index of business expectations has dipped after the late-2015 jump that appeared to be associated with the change in prime minister in September,” he said.

“The only positive component of the Business Expectations Survey is for capital expenditure, which has edged higher, helped, it appears, by low interest rates and a more positive outlook for the non-mining sector.

“More than offsetting this positive news are falls in expected sales, profits and employment. The big-picture view of the economy as 2016 kicks off is a continuation of the below-trend pace of growth.”

The survey results are based on responses from 400 business executives taken each month.


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