Coinciding with announcement made by Deloitte Access Economics, Dunn & Bradstreet business expectations survey executives are increasingly pessimistic about the outlook for the new financial year, despite selling prices remaining steady and the majority of firms experiencing sales growth during the March quarter.

The survey shows sales expectations are now at their lowest level in two years, dropping six points to a net index of eight. Expectations are particularly weak for the retail sector, which continues to struggle to entice consumer spending even with sustained discounting. Sales expectations for retailers sit at a net index of -5, which is 13 points below the overall index of eight. Wholesalers are the only sector to have a rise in sales expectations for the September quarter.

Dun & Bradstreet CEO Christine Christian said the data show the emergence of a de-leveraging trend among local businesses.

“Retail has always formed a significant role in the economy but with consumers continuing to feel the effects of last year’s interest rate hike retailers are becoming more conservative with profit projections. In particular the continuously strong dollar is having a two pronged effect, encouraging some consumers offshore while also making importing easier for a percentage of businesses,” she said.

“The data show a clearly delineated, two-speed economy whereby the success of the mining industry is masking the problems currently being experienced by the other sectors.”

Despite the Reserve Bank’s temporary halt on interest rate hikes, interest rates are still the greatest cause for concern amongst Australian business executives, the survey said.

It also revealed that that 35 per cent of executives see that a continuing strong Australian dollar will have a positive impact on their business in the quarter ahead – for 15 per cent a significant impact. Some 24 per cent expect a high dollar to have a negative impact; for 40 per cent it will have no impact.

According to Duncan Ironmonger, Dun & Bradstreet’s economic consultant, the Australian economy is now through the short-term downturn due to floods and cyclones.

“The latest D&B survey reveals a sharp reduction in business expectations for growth in sales, profits, employment and capital expenditure to well below their 10-year averages. Retailers are perhaps the worst affected with two consecutive negative quarters of expected profits growth,” he said.