Monday, September 7, 2009

Australian Firms` Stock Rebuild Plans Highest in 5 year Survey


SYDNEY (Dow Jones)--Australian economic growth is set to get a boost in coming quarters amid signs that firms plan to swiftly rebuild inventories and increase investment.

According to a survey of business executives by Dun and Bradstreet in August, expectations for growth in inventories have reached their highest level in five years, with 20% of firms planning to increase stock levels, compared with 12% expected to decrease inventories.

Economists expect inventory rebuilding to keep momentum behind the economy for some quarters to come. Australia's economy grew a seasonally-adjusted 0.6% in the second quarter of 2009, and 0.4% in the first quarter.

The pace of expansion pulled the commodity rich economy clear of any threat of recession, and put it out front among developed economies, fueling expectations interest rates may soon be hiked.

Selling price expectations fell to their lowest level in more than four years, with 30% of firms expected to increase prices while 9% intend to cut prices, the survey said.

Capital investment expectations are at the highest level in two years with 16% of firms expecting an increase in this area, while 7% expect a decrease, the survey said.

Sales and profit expectations rose significantly as 46% of respondents said they expect an increase in sales, while 31% expect an increase in profits, it said.

However, many firms continue to report difficulty accessing bank credit.

The positive results from the survey "are an indication that executives have enough confidence in Australia's recovery to believe that conditions will hold up as we head towards Christmas, a traditional boom time for many sectors," said Christine Christian, Dun and Bradstreet's chief executive officer.

"We have seen a substantial improvement in executive expectations in recent months with key indexes such as inventories, capital investment, sales and profits all entering positive territory for the first time since June 2008 quarter," she said.

"However, it is important we remember that we are coming off a comparatively low base as firms are measuring their expectations against the December quarter of 2008 when Australia experienced negative growth," she added.

Employment expectations also rose in August as 16% of executives expect to hire new staff while just 7% expect to lay off workers, according to the survey.

D&B conducted the business expectations survey in August 2009. The data is based on a sample of 1,200 business owners.

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