Sales expectations soar for 2nd quarter

Sales expectations among businesses for the June quarter are at their highest level in eight years, a private sector survey shows.

Sales expectations for the June quarter almost doubled from those of the March quarter, the Dun & Bradstreet national business expectations survey conducted in January showed.

Dun & Bradstreet chief executive Christine Christian said business confidence was returning to levels not seen since well before the global finance crisis.

"Sales expectations are at their strongest level since the December quarter 2003," Ms Christian said.

"We are also no doubt seeing businesses increasingly factoring in the impact of further interest rate reductions on their operations.

"Historically, leading indicators of financial stability, such as cash flow, have improved during the June quarter as firms gain momentum."

The Reserve Bank of Australia (RBA) cut its cash rate at both its November and December board meetings, each time by 0.25 percentage points, taking it to 4.25 per cent from 4.75 per cent.

Another quarter percentage point cut was widely expected when the RBA board held its February meeting yesterday, but did not eventuate.

Ms Christian said the survey showed that manufacturing was the driving force behind the surge in sales optimism.

But the survey also showed a drop in employment expectations for the June quarter.

"This would appear to indicate that businesses are still taking a cautious, wait-and-see approach on trading conditions before looking to expand their operations or their workforce," Ms Christian said

Despite the improved confidence, the proportion of businesses welcoming the high Australian dollar dropped to 38 per cent last month, from 45 per cent in January last year.

- AAP