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AUSTRALIAN businesses don’t plan to employ new staff in the months ahead according to research by Dun & Bradstreet.
The latest Business Expectations Survey shows a consistent decline in hiring expectations over the last 18 months with businesses expecting weak economic growth to continue into the new financial year.
According to the survey, the employment index is at its lowest level in four years, with companies in the construction, manufacturing and retail sectors expecting the greatest level of employment reduction.
The Australian Bureau of Statistics has reported a 7.3 per cent fall in total job vacancies in the three months to May.
Operating costs, weak sales and cash flow appear to be limiting the capacity of businesses to hire new staff, according to Dun & Bradstreet CEO Gareth Jones.
“With little spark to be found in the domestic economy, businesses are wary of investing, instead focusing on their core operations and controlling their costs,” says Jones.
“This is a continuation of what businesses have been saying throughout the first half o the year – that they won’t seek new credit to grow their business and that they won’t be increasing employment and other significant forms of business spending.
“It appears businesses don’t seen any substantial improvement in trading conditions in the new financial year to make them prepare for growth, while the upcoming federal election is also creating uncertainty and dampening new activity.”
According to the survey, 25 per cent of businesses see a weak demand for products as the biggest barrier to growth in the September quarter.
In addition to a weak sale outlook, the profits index for the next three months has also fallen.
Dun & Bradstreet economic advisor Stephen Koukoulas says the business sector is definitely preparing for weaker activity.
“Of most concern is the scaling back in employment intentions, which point to net job shedding and undoubtedly a rise in the unemployment rate in the next few months, “ says Koukoulas.
“These business expectations point to the opportunity for the RBA to further cut interest rates particularly as the survey also shows weakness in expected sales and a softer profit outlook.”
He says the rise in expected selling prices on the back of a recent fall in the Australian dollar is unlikely to impact RBA decisions.
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