The days of discounting may be over with Australian companies expecting to report stronger sales and much higher profit margins early next year.
Dun & Bradstreet’s latest Business Expectations Survey, put businesses’ earnings outlook for Q1 2014 at a 10-year high after a relatively pessimistic year.
Of the businesses surveyed, 18% said they would raise the prices of their goods and services in the new year, while 2% said they would discount their prices.
D&B said the response took its selling prices index to a 1.5-year high, suggesting that policymakers would be watchful of future gains after inflation came in above expectations last quarter.
From the report:
Despite low interest rates and their renewed optimism, businesses did not plan to borrow, hire or otherwise spend much more in 2014 than they did this year, the credit reporting agency found.
“Although these are still early days, there’s a clear shift in the near-term optimism of businesses,” said D&B CEO Gareth Jones.
“In recent years we’ve seen a temporary improvement in the run towards Christmas, so it’s encouraging to see that the business outlook into early 2014 isn’t tailing off – indeed, there’s a big lift when it comes to profit expectations and a strengthening in the forecast for sales.
“We’ve recently seen the effect of rate cuts on consumer confidence levels through a rebounding property and sharemarket, and it now appears we’re seeing
that same positive impact finally filter through to the business sector.
“It appears that the missing pieces for a sustained improvement now lie with credit, investment and employment activity.”
There’s more in D&B’s report.