Retailers face a tough Christmas

Tue, 03 Oct 2017  |  

The latest Dun & Bradstreet survey is available at this link: https://dnb.com.au/article-bex-q4-2017-final-report.html#.WdLuVDOB24k  The key points of the report are below. 

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Retailers face tough Christmas

Business sentiment remains flat moving into the final quarter of 2017, despite an uptick in mid-year trading. In Dun & Bradstreet’s September Business Expectations Survey companies are predicting weaker sales, lower employment and a decline in selling prices; however, profits and capital investment are tipped to rise in the last months of the year. The upcoming Christmas period has done little to lift spirits in the troubled Retail sector, with expectations uncharacteristically low for the December quarter.

"As 2017 draws to a close, business expectations remain broadly steady, which points to ongoing moderate economic growth. Actual business activity ticked higher in the June quarter, but it remains in a range that points to the economy neither being strong nor weak, but rather something in between."  Stephen Koukoulas, Dun & Bradstreet Economic Adviser

Retailers, Manufacturers downbeat
Sentiments within the Retail sector remain subdued: while expectations have ticked upward for the fourth quarter compared to the third quarter, the current result is substantially lower than prior corresponding quarters.

Retailers are the least upbeat about business growth across all sectors: 55.4 percent of retail firms said they were more optimistic about business growth in the year ahead compared to the previous year, while 35.7 percent are less optimistic. Wholesalers are the most upbeat, with 69.8 percent feeling more optimistic compared to 20.8 percent feeling less optimistic.

Meanwhile, Manufacturing firms saw a notable drop-off in optimism in the September survey, with Q4 sales, profits and capital investment expectations falling to multi-year lows.

"Business expectations in manufacturing have taken a sharp turn lower, which appears to be linked to the recent strength in the Australian dollar which is undermining the sector’s international competitiveness. Indeed, manufacturing is poised for a period of severe weakness with expected profits, sales and capital expenditure at the lowest level in at least four years."  Stephen Koukoulas, Dun & Bradstreet Economic Adviser

During the third quarter, manufacturers were the most likely of all sectors to say their business would benefit if the Australian dollar was lower than the current level: 17.6 percent of Manufacturing businesses would prefer a lower dollar, compared to an average of 9.7 percent across all sectors.

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THE LATEST FROM THE KOUK

Will falling house prices trigger the next Aussie recession?

Tue, 17 Jul 2018

This article first appeared on the Yahoo 7 website at this link: https://au.finance.yahoo.com/news/will-falling-house-prices-trigger-next-aussie-recession-000039851.html

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 Will falling house prices trigger the next Aussie recession?

House prices are falling, auction clearance rates continue to drop and there is a such sharp lift in the number of properties for sale that, for the moment, no one is willing to buy at the given asking price.

Potential house buyers who have held off taking the plunge in the hope of falling prices seem to be staying away, perhaps hoping for further price falls. But also influential factors forcing buyers away is the extra difficulty getting loans approved as banks tighten credit standards, then there are concerns about job security and associated awareness of probable cash flow difficulties given the weakness in wages growth. It is remarkably obvious that house prices will continue to fall and this poses a range of risks to the economy.

Research from a range of analysts, including at the Reserve Bank of Australia, show a direct link between changes in housing wealth and consumer spending. This means that when wealth is increasing on the back of rising house prices, consumer spending is stronger.

This was evident in Sydney and Melbourne, in particular, when house prices in those two cities were booming in the two or three years up to the middle to latter part of 2017. Retail spending was also strong. Looking at the downside, in Perth where house prices have fallen by more than 10 per cent since early 2015, consumer spending has been particularly weak.

Punters point to by-election troubles for Labor

Mon, 16 Jul 2018

 

If the flow of punter’s money is any guide, Labor are in for a very rough time on Sublime-Saturday on 28 July when there are five by-elections around Australia.

In the three seats where the results are not a forgone conclusion, the flow of money on Liberal candidates over the last few days has been very strong.

The Liberal Party are now favourites to win Braddon and Longman and in Mayo, Liberal candidate Georgina Downer has firmed from $4.20 into $2.75.

If the punters are right, Sublime-Saturday would see Labor lose Braddon and Longman and could see Liberal’s sneak back in Mayo.

If so, it would be odds on that Prime Minister Turnbull would go to the polls as soon as possible, not only to take advantage of the by-election fallout, but, from a different angle, go before the housing market and the economy really hit the wall, probably in late 2018 or 2019.

BRADDON

Liberals $1.70 (was $2.25)
Labor $2.05 (was $1.65)

MAYO

Liberals $2.75 (was $4.20)
Centre Alliance $1.35 (was $1.15)

LONGMAN

Liberals $1.50 (was $2.00)
Labor $2.50 (was $1.85)