It appears that there may be a light at the end of the tunnel as businesses are showing renewed optimism about trading in the New Year, according to the latest Dun & Bradstreet’s business expectations survey.

This comes off the back of better than expected results in the September quarter and the Reserve Bank of Australia’s decision to cut in interest rates. 

The survey found that firms were anticipating improved performance across sales (+11), profits (+2), employment (+7) and investment (+7) for the first quarter of 2012, with a 25 per cent fall in the number of firms anticipating being impacted by interest rates.

Duncan Ironmonger, Dun & Bradstreet's economic consultant, the latest the survey shows improving prospects for the year ahead with all aspects of the first quarter of 2012 being much better than those for the last three quarters of 2011.

"Despite volatility in international financial markets in recent weeks, current financial conditions in Australia have become easier with bank lending rates for some housing and business loans being reduced. This change has contributed to a more confident outlook," he said.

"The survey shows a welcome pick-up in the expected growth in employment across all sectors. If this is realised and sustained, we may see further favourable moves in the unemployment rate next year."

Although, despite resurgence in overall expectations, retailers are still doing it tough – citing slow demand and wages growth as their biggest concerns for next year.

Dun and Bradstreet CEO, Christine Christian, said outlook for selling prices continues to be subdued, down two points for the quarter, and 16 points below the long-range average.

"It would appear that retailers and manufacturers are unlikely to significantly raise prices any time soon, in part because the higher exchange rate is restricting their capacity to raise prices" she said.

"While this may assist with volumes, margins will continue to suffer and this is being reflected in what we are seeing in terms of profit expectations.”

More than one in four retailers voiced concern over wages and salary growth, up 12 percentage points on the previous month. Meanwhile, 62 per cent of retailers expect slow demand to be the biggest barrier for their business in the year ahead, up ten percentage points since last month.

Not surprisingly, profit expectations in the sector remain in negative territory for the fourth quarter in a row, reflecting the industry's actual negative profit performance over the last five quarters.