Interest, petrol most worrisome

Interest rates and higher petrol prices remain the chief concerns for executives as they confront an expected fall in sales and profits in the new year, a new survey shows.

Inflationary pressures are set to remain an issue, with more than half of those surveyed expecting to increase their selling prices in the March quarter, the latest Dun & Bradstreet Business Expectations Survey, published on Tuesday, shows.

Just seven per cent of executives expected to reduce their prices in the quarter, with 60 per cent expecting selling prices to be higher, the survey showed.

Meanwhile expectations of sales and profit growth fell for the first time in 12 months.

The index for expected sales fell by one point to 19 after 39 per cent of executives surveyed said they expected an increase in sales and 20 per cent expected a decrease.

The profits index fell four points to eight, with 32 per cent of executives expecting profits to rise and 24 per cent expecting a fall.

Christine Christian, chief executive of D&B Australasia, said the survey results showed there were some challenges beginning to creep up on Australian businesses following an extended period of positive economic conditions.

More than half (57 per cent) of those surveyed expected tighter conditions in credit markets to have a detrimental effect on their business.

“There is a tendency for executives to relax their management of some functions when economic conditions are strong,” Ms Christian said.

“Now, as we begin to see some challenges creeping into the market, it is particularly important for businesses to keep a tight rein on operations.

“This will help to prevent an additional burden in the new year.”

The survey showed 19 per cent of executives categorised fuel prices as the most important influence on operations in the quarter ahead, while 25 per cent said interest rates were their primary concern.

The outlook was more positive for job hunters, with 15 per cent of executives expecting to have more staff in the quarter ahead while 10 per cent expected to decrease staff numbers.

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