Australian businesses brace for difficult time ahead

SYDNEY - Australian businesses are bracing for a difficult start to the new financial year, a new survey shows.

The Dun & Bradstreet (D&B) business expectations survey showed many businesses believed they would need to increase selling prices in the September quarter because of inflationary pressures.

The outlook for employment growth in the quarter weakened, and sales and profits growth expectations continued their downward slide.

D&B chief executive officer Christine Christian said the survey showed businesses were heading into 2005/06 with a set of fairly grim expectations.

"Australian businesses do seem to be facing up to a much more difficult operating environment," she said.

Businesses still appeared to be intent on protecting their margins by pushing selling prices higher, Ms Christian said.

"However the market is already signalling that demand is softening in many sectors, and it seems unlikely that businesses can sustain these expected pricing levels," she said.

Of the businesses surveyed, 42 per cent expect to raise their selling prices in the September quarter, while 11 per cent expected to decrease prices.

Although 15 per cent of executives expected to hire more staff than a year ago, 11 per cent expected a reduction.

The survey showed 35 per cent anticipated growth in sales during the quarter, with 24 per cent expecting a decline.

Anticipated capital investment was at its lowest level in more than a decade, with seven per cent of businesses expecting a rise and six per cent expecting a fall.

The outlook for inventories was unchanged, with 17 per cent of firms expecting an increase in the September quarter and 16 per cent expecting a decrease.

- AAP