The challenges of late 2008 look set to carry over into the new year with business chiefs anticipating further erosion of profits and sales as credit market conditions, a volatile Australian dollar and inflationary pressures impact prospects for 2009.
A Dun & Bradstreet Business Expectations Survey released today reveals that 54 per cent of firms anticipate a downturn in sales in the March 2009 quarter, while 58 per cent have the same expectation for profits.
The decline reflects the slowdown in consumer spending which has been felt by 28 per cent of firms and the poor results experienced in the first three quarters of 2008.
The survey shows that 73 per cent of firms have been negatively impacted by recent movements in the Australian dollar, a 61 per cent increase since July.
Almost half of the executives surveyed by Dun & Bradstreet indicated that recent fluctuations in credit market conditions also negatively impacted on their business, up from 26 per cent last month.
"Falling commodities prices have caused the Australian dollar to drop markedly in recent months, forcing businesses to pay more for their imports," Dun & Bradstreet's chief executive Christine Christian said.
"On top of this, the global liquidity crisis has also resulted in significant cash flow challenges for some businesses and forced many organisations to postpone growth plans as access to credit has dried up."
Recent reductions in the official cash rate have shown through in a 9 per cent decline in executive concerns regarding interest rates.
However, despite the decline, this issue remains the primary concern for executives in the quarter ahead.
Four in 10 firms indicated in the survey that interest rates will have the greatest impact on their business, this increases to 48 per cent for retail executives.
About 14 per cent of firms rate wages growth as their primary concern for the coming year.
Half of executives surveyed indicate that petrol prices have negatively impacted their business, down from 93 per cent in September, while 35 per cent now rate petrol prices as the primary influence on their business in the quarter ahead, up 7 per cent since last month.
Dun & Bradstreet's economic consultant Duncan Ironmonger said Australia would ride out the current economic turmoil and was in better shape than mot industrial countries.
"The federal government and Reserve Bank have the capacity to stimulate economic growth and have indicated that they will use that capacity as necessary throughout 2009," Dr Ironmonger said.
"If world oil prices remain low, Australians should receive some relief on cost pressures."
