Businesses worried about budget cuts

MORE than half of Australia's businesses are worried about the fallout from the federal government's tough budget will have on them.

Nearly 60 per cent of businesses surveyed by Dun & Bradstreet expressed concern about the budget.

Retailers are bracing themselves for a tough September quarter, with expectations of falling profits following the steep spending cuts announced in last month's budget.

A quarter of retailers expect a fall in earnings, pulling the sector's profits index into negative territory for the first time in two years.

"The fall in expected earnings for retailers is reflective of the mood among consumers, which has dropped significantly following the release of the budget," the head of Dun & Bradstreet's Australasian operations Gareth Jones said on Tuesday.

"Combined with soft wages growth, and signs from D&B's consumer financial stress index that individuals are finding conditions more difficult, it's unsurprising that many businesses expect to see spending levels fall away."

Despite the gloom in the retail sector, manufacturers raised their expectations for sales and profits to 10-year highs.

Forty six per cent expected higher profits in the September quarter, with 57 per cent forecasting better sales.

Wholesalers were just as upbeat, with 43 per cent expecting a rise in earnings and 56 per cent flagging a lift in sales.

However their optimism was not enough to offset the lower expectations among retailers and those in the transportation, communications and utilities sector as well as those in finance, insurance and real estate, and services.

As a result the D&B all-industries sales expectations was flat at 33.4.

Overall, 62 per cent of businesses expressed confidence about growth this year compared to 2013.

Hiring expectations also lifted for a fourth consecutive quarter, buoyed by the better-than-expected 5.8 per cent unemployment rate announced in May.

More than a fifth of businesses plan to hire workers in the September quarter, with nine per cent planning to cut staff.

"Despite concerns from business about the potential impact of the budget, expectations are, on balance, favourable for the next three months," said Dun & Bradstreet's economic advisor Stephen Koukoulas.

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