Business confident about Dec qtr

BUSINESS confidence looks to be getting better, helped by a falling exchange rate and the expectation of another Reserve Bank of Australia rate cut.

The latest Dun and Bradstreet Business Expectations Survey showed that 24 per cent of businesses expect increased earnings in the fourth quarter of the year.

Dun and Bradstreet chief executive Gareth Jones said businesses were looking to the end of the year for better conditions.

"It's fair to say that business owners have had a tough time of it through the first part of this year; battling against high operating costs, poor cash flow and consumers that have generally spurned spending for savings," he said.

"Our first look at December quarter expectations, however, hints that operating conditions are stabilising along with a lower Aussie dollar and with expectations of a further interest rate cut to stimulate spending.

"As we await a period of sustained economic stability, it may be that the conclusion of the election is the event that kicks these initial findings on sentiment from stable to optimistic, he added.

The D&B survey shows that 38 per cent of businesses are likely to delay significant decisions and investment until after the September 7 federal election.

Dun and Bradstreet economic adviser Stephen Koukoulas said business expectations were still below those of a year ago.

"While the economy is not yet strong, the tentative signs of a bottoming or a moderate upturn in most components of the Business Expectations Survey is encouraging," Mr Koukoulas said.

"With a further interest rate cut and the lower Australian dollar still to show up in economic activity, there is a strong chance that we could see a turning point that could signal a stronger year for the economy in 2014."

The RBA board meets on Tuesday and is widely expected to cut the cash rate by a quarter of a percentage point to a new record low of 2.50 per cent.

The Australian dollar has lost more than 12 US cents since early May and is now trading below 90 US cents.

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