350 Businesses Report on Expectations for 2013.

There seems to be total confusion on where the economy is currently. On one hand we have exceptional returns being reported through the Stock exchange by most of our public companies.  The retail sector had high returns over the Christmas period, new car sales are up, housing construction companies are reporting increases in sales supported by both federal and state governments who are concentrating on support grants on housing and construction. Natural disasters have affected most states with floods, bushfires and drought in some areas.  Now we have a report from major industry leaders advising the 2013 may be slow. WHO KNOWS? It is however important to be across all areas and watch closely.

The report below comes from the recognized leading industry group in Australia on industry issues and involves 350 CEOs who have contributed to this report.

MEDIA RELEASE  (15 February 2013)

Australia’s ‘Gap Year’

Australia’s gap year impact of the structural changes and significant challenges the Australian economy is to experience throughout 2013.

The Australian Industry Group’s Annual Outlook Report – “Business prospects in 2013 (full report 36 pages)”: “Business Prospects in 2013”  highlights the impact of the structural experiencing and will continue to experience Ai Group Chief Executive, Innes Willox said: “With the mining boom slowing and with other sectors struggling, there are no obvious candidates set to make the most of 2013?”

Ai Group Chief Executive, Innes Willox said:  “The Survey Report poses the question:  which is based on responses from 350 business leaders across manufacturing, construction, found that over half of all CEOs (52%) expect general business conditions to deteriorate in 2013 and a third expect no change. Only 16% of CEOs surveyed expect conditions to improve than half of CEOs in manufacturing (56%) and construction (52%) expect business conditions to deteriorate in 2013, relative to 2012. In services, 42% expect deteriorating conditions, while mining, 47% expect conditions to worsen. Indeed, some key parts of the economy are looking at a severe deterioration. This will come on top of a tough year in 2012 for many businesses – 58% of all CEOs said 2012 had brought worse conditions than 2011”.

Australia looks set for a lull in growth in 2013. The concerns of our CEOs grouped around three key themes:

1. Slowing demand across the economy.
2. Value of the Australian dollar and the challenge of global competition.
3. Rising business costs.

Can we make the most of this ‘gap year’?  We should use this productivity growth and establish the foundations for a more resilient and diversified economy.  We have the year to build capabilities; to get on the right track with reforms to education and training; business innovation; to make sensible changes to workplace relations arrangements and to commit to  an Australia’s tax arrangements.

“This election year is an ideal opportunity for political leaders to build the longer-term drivers of a growing a Key expectations of CEOs surveyed for year: 

• Input cost increases, especially for energy. expecting input prices to fall. 82% of CEOs expect their energy charges will rise further in 2013.

• Flat sales revenue. Sales revenue will improve for 39% of 21% expect sales revenue growth to be flat, relative to a year ago.

• Lower levels of employment. Employment will expand in a quarter of businesses, but more than a third (37%) plan to reduce employment and 38%.

• Rising unit labour costs that will not be fully offset by improved productivity. their unit labour costs to increase further On labour productivity, one third of CEOs (33%) are expecting to see an improvement in 2013. Of more concern, 13% say they expect labour productivity in their own business to fall in 2013, relative to 2012 and over half (54%) expect to see no improvement.

• Reduced capital investment. Capital investment expenditure will rise for a quarter of businesses, but decline for 31% of businesses and remain unchanged for 44% of businesses.

• Slightly higher R&D spending. R&D spending will increase for 21% of business remain unchanged for 61%.

Gap year ’: will we make the most of 2013? It is an ideal opportunity for political leaders to take the initiative and growing and prosperous economy,” Mr Willox said.

Key expectations of CEOs surveyed for Ai Group report – Business prospects in 2013: Australia’s gap

• Cost increases, especially for energy. Input costs will rise for half of all businesses, but 8% are prices to fall. 82% of CEOs expect their energy charges will rise further in 2013.
• Sales revenue will improve for 39% of businesses, but decline for 40% of businesses. 21% expect sales revenue growth to be flat, relative to a year ago.
• Employment will expand in a quarter of businesses, but more than a third (37%) plan to reduce employment and 38% plan no change to their employment numbers.
• Rising unit labour costs that will not be fully offset by improved productivity. further in 2013, relative to 2012. 13% of CEOs expect them to go down.
• Labour productivity, one third of CEOs (33%) are expecting to see an improvement in 2013. Of more concern, 13% say they expect labour productivity in their own business to fall in 2013, relative to 2012 and no improvement in 2013.
• Capital investment expenditure will rise for a quarter of businesses, but decline for 31% of businesses and remain unchanged for 44% of businesses.
• R&D spending will increase for 21% of business .