Australian businesses, not know for their optimism, are consistently overestimating their future sales and earnings.
According to Dun & Bradstreet’s Business Expectations Survey, this represents a continuation of below trend growth in the economy.
Compared to initial expectations, the number of businesses achieving an increase in sales during the third quarter fell to 38% from 43%.
At the same time, those reporting reduced sales was 20% compared to the 11% which initially forecast weaker activity.
These responses moved the sales index to 18.3 points for the September quarter, short of the expectations index of 32.5 points.
Upbeat sales forecasts through to the first quarter of next year have lifted the index further, to 38.7 points.
This chart shows the gap between expectations and actual performance:
Various measures of confidence, both consumer and business, in Australia are showing mixed results.
However, the latest ANZ-Roy Morgan weekly consumer confidence survey is showing a drop of 1.6%. This took back half of the recent three-week bounce and confirmed once again both the enduring uncertainty at a consumer and household level and also that recent hopes for a positive Christmas may be dashed.
In the Dun & Bradstreet’s Business Expectations Survey, a similar trend has developed in the profits performance.
While 35% of businesses had expected higher earnings in the September quarter, only 27% delivered.
And 19% of firms experienced a decline in their profits compared to the 15% that had initially forecast a drop in earnings.
The Q1 2015 outlook for profits is 25.6 points, marginally higher than the 25.0 points forecast at the same time last year.
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