More than 50 per cent of firms that were surveyed in the latest Dun & Bradstreet business expectations survey anticipate demand to slow over the next 12 months.
This comes as they remain cautious about the outlook for Christmas amid expections of slowing demand and greater economic uncertainty.
The survey shows that for the upcoming December quarter, there’s a high level of negative outlook amount retailers, as a reflection of the industry’s actually performance in the June quarter.
Significant declines were recorded in the second quarter across sales (-3) and profits (-10), forcing stores to shed employees (-2). This is anticipated to continue through December, with profits trending down and prompting retailers to slash more staff numbers over what should be a period of peak productivity.
Christine Christian, Dun & Bradstreet CEO said the global economic uncertainty is affecting business and consumer confidence which is having knock-on effects on sales, profit and employment growth expectations.
“Australian consumers are now saving at levels not seen since the 1980s. Retailers, not surprisingly, are experiencing one of their worst years. Retailers seem to have given up hope that conditions will improve this side of Christmas,” she said.
“There is an acute awareness in the industry that retailers cannot count on the usual flurry of Christmas spending to push them over the line, as they might have done in the past. This is a real concern for many businesses as Christmas is such a key time for discretionary spending and most rely on the period to kick start them into the New Year.”
This uncertainly and lack of confidence is reflected in survey findings that less than 20 per cent of firms plan to seek finance or credit to grow their business in the coming months.
According to Duncan Ironmonger, Dun & Bradstreet’s economic consultant, in the last three years Australian households have reached a relatively high gross saving ratio of around 17 to 18 per cent of disposable income. This compares with a saving ratio of only 8 per cent in the years 2003 -2005.
“This recent higher saving level has been accompanied by a very flat trajectory in retail spending. The latest D&B survey shows that the retailing sector is in the greatest difficulty with negative expectations for both profits and employment for the December quarter,” he said.