Interest rates were the on the minds of retailers when they were asked in the latest Dun & Bradstreet survey what issue was likely to influence their business operations in the December quarter.
The national survey of manufacturing, wholesale and retail businesses found that in June 45 per cent of retail executives responded that interest rates would be their biggest influencer, which eventually dropped down to 29 per cent in August. Despite this change, it remained the primary influencer.
Dun & Bradstreet CEO, Christine Christian, said the findings were consistent with a decline in business credit activity recorded by the Reserve Bank.
“We are beginning to see companies, particularly in manufacturing and retail, increasingly behaving like businesses in recession. The rising vulnerability to an interest rate rise is a warning sign these firms are deeply uncertain about the future,” she said.
“We are seeing that interest rate concerns are making businesses less inclined to grow their activities through new lines of credit or finance. This will have a knock on effect to sales and employment with companies more likely to resort to cost cutting measures.”
The business expectations survey also shows that for the upcoming December quarter that while there have been numerous reports that the high Australian dollar is impacting negatively on local retailers, a constant majority surveyed responded with ‘no impact’ or ‘small to positive impact’.
Conversely, one-quarter of Australian businesses expect a high dollar to have a negative impact.
But at the same time, the biggest concern for retailers that were going prevent their business from growing in the year ahead was that there’ll be a slow growth in the demand for their products, as reported by 45 per cent of participants in August.
According to Duncan Ironmonger, Dun & Bradstreet’s economic consultant, Australian households are maintaining a very cautious stance on spending; the latest ABS trend retail sales data are flat with only 0.1 per cent growth in both June and July.