Trade Resources Logistics & Customs Australian Businesses Don't Plan to Hire New Staff in The Coming Months

Australian Businesses Don't Plan to Hire New Staff in The Coming Months

Australian businesses don’t plan to hire new staff in the coming months, and are putting off investments, as the cost of doing business takes its toll.

On the back of recent high-profile job cuts and off-shoring announcements by a number of Australian companies, Dun & Bradstreet’s latest National Business Expectations Survey shows a gloomy outlook for jobs growth this year. The survey’s index has continued a downward trend through to the June 2013 quarter, falling below its 10-year average level, to a score of zero.

D&B’s research also shows that no jobs have been added since the March quarter of 2012, with the actual employment index remaining in negative territory for three consecutive quarters, dropping to negative seven in December last year – its lowest point in nearly three years.

Jobs Cut as Business Costs Bite

The weak jobs outlook can be explained by the high cost of doing business, with D&B’s research revealing that 44 per cent of businesses see operational costs as their biggest barrier to growth in the coming months.

Combined with sluggish sales and consumer activity, these financial pressures have businesses focusing strictly on their core operations. In this environment, businesses are unlikely to add new jobs in the near-term, and they are also reviewing their plans for capital investment.

According to Dun & Bradstreet’s Director of Corporate Affairs, Danielle Woods, businesses are looking to control their costs while they await a sustained recovery in the economy.

“With businesses keeping a careful eye on their expenses, the significant cost of hiring new staff appears to be dampening expectations for jobs growth,” she said.

“Added to the mix of operating costs, we are hearing businesses report that the high Australian dollar and cash flow will influence their capacity to grow.

“With these conditions prevailing, it’s unsurprising to see the outlook for both employment and investment falling away,” she added.

Investment expectations for the June 2013 quarter dropped sharply to an index of five, compared to 14 in the previous quarter. The outlook for capital spending is now at its lowest level since the September 2011 quarter, while the actual index for the December 2012 quarter is negative three.

In further signs that investment is cooling, businesses indicate they are more likely to take advantage of low interest rates to pay off debt, rather than increase their borrowings. D&B also found that just six per cent of executives intend to seek finance to help their business grow in the months ahead.

The Business Expectations Survey presents a picture of a less optimistic business community, with decreases in all of the survey’s forward-looking indices – sales, profits, selling prices, inventories, employment and capital investment – compared to the previous month.

The outlook for sales has declined for the second consecutive, while expectations for selling prices continues to move lower, with the index decreasing to two for the June 2013 quarter, well under its 10-year average of 29 points.

The broad fall in expectations suggests operating conditions will remain difficult at least until the middle of this year, with businesses also finding little relief in their cash flow position.

D&B’s survey shows that seventy-five per cent of businesses see cash flow as an issue for their operations during the months ahead. This comes as D&B’s latest Trade Payments Analysis reveals that the time businesses are taking to pay each other has stalled at an average of 52 days. At more than three weeks beyond standard terms (30 days), this unhealthy cash flow cycle is stifling business’s opportunity to invest and grow by limiting their access to funds.

“The current and future challenges for businesses continue to come from a sluggish economy, where sales growth is weak, businesses face challenging operating conditions, and consumer spending is soft,” said Ms Woods.

“While consumers have regained their appetite for the share market, we are yet to see that kind of sentiment spill over to more discretionary spending, which in turn is limiting a breakout in business confidence and growth.

“Until there is sustained improvement in confidence and trading conditions, we can expect businesses to keep a tight check on their expenses and continue to delay larger investments such as new jobs.” 

Source: http://www.tandlnews.com.au/2013/03/07/article/jobs-cut-as-business-costs-bite/
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Jobs Cut as Business Costs Bite
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