CAPITAL INVESTMENT ON THE RISE AMID SALES SLOWDOWN

AUSTRALIAN businesses will shift their focus to capital investment in a bid to tackle lower sales expectations in the first quarter of 2016, according to Dun & Bradstreet.

The latest Business Expectations Survey forecasts strong investor sentiment with 23.1 per cent of businesses planning to increase expenditure.

D&B head of group development Adam Siddique says the figures are promising, with the Capital Investment Index up to 12.6 points compared to 11.9 points in the December quarter last year.

"We are finally seeing some positive movement in the capital investment space, which is encouraging and something we will track for further signs of improvement in the short-term," Siddique says.

"As flagged in last month's survey, sustained business investment across all sectors is a key driver of future economic growth."

He says employment opportunities should increase alongside investment as business activity ramps up.

Meanwhile, the Business Expectations Index has fallen to 18.9 points in the first quarter, down 2.9 points since last year. It continues to track higher than the 10-year average of 6.8 points.

Businesses in the transport, communications and utilities industry and the finance, insurance and real estate industry anticipate a lift in sales and profits during the start of the year.

Construction demonstrated the lowest expectations for the March quarter, with 35 per cent of businesses saying they are less optimistic about business growth in 2016.

D&B economic advisor Stephen Koukoulas says the overall tone of the business sector has dipped since the change in Prime Minister in September.

"The only positive component of the Business Expectations Survey is for capital expenditure, which has edged higher, helped it appears, by low interest rates and a more positive outlook for the non-mining sector," Koukoulas says.

"More than offsetting this positive news are falls in expected sales, profits and employment.

"The big picture view of the economy as 2016 kicks off is a continuation of the below-trend pace of growth.

"The economy is not doing poorly, but nor has it had the breadth of expansion that is required for the business sector to have confidence and a sustained lift in sales, profits and employment."