The continuing drought and an expected housing construction slump will be the key detractors from the economy in 2003.
Data in the latest
National Business Expectations Survey from
D&B Australia shows most respondents approaching the new year with caution.
"Our survey shows that at the end of 2002, 26% of executives thought the drought was having a direct negative effect on their business," says Christine Christian, chief executive officer of D&B Australia & New Zealand.
"Significantly, 8% said the drought was having a very negative effect, compared with 2% in October.
"On the housing construction front, 42% of executives say the expected slowdown will have a negative effect on their business over the next six months. This figure has risen from 32% in September.
"With the expected slump in housing construction growing nearer, more and more Australian executives are recognising the potential impact it will have on their business.
"On a positive note, 29% of executives said that current low interest rates have had a very positive impact on their business and 27% a moderately positive impact. This situation looks likely to remain in place for at least the first half of 2003," Christian says.
The December survey, looking ahead to the first quarter of 2003, shows a small rise in all expectations except sales and selling prices. Employment and profits expectations rose from an 11 year and a 19 month low respectively. Capital investment intentions continued to strengthen for the second consecutive month.
Actual results from the September quarter showed more companies were hiring than shedding staff, but falling profits still outnumbered profit gains.
D&B economic consultant Dr Duncan Ironmonger says it is encouraging to see expectations for growth in capital investment remained strong in December.
"In addition, the manufacturing and wholesaling sectors have shown a much stronger intention to increase the numbers of their employees in the coming March quarter," he says.
"Although a panel of 19 economists recently predicted an average growth rate of 3%, this is now unlikely.
"International developments, including a possible war in Iraq, look set to produce a result for the year somewhat less than this."