The D&B Business Expectations index is strong again, but that’s the problem, such results usually mark turning points down, not up. Witness:
Sales expectations are strong:
Profits strong:
Employment firm:
Capex firming:
Selling prices to the moon:
The Kouk is ecstatic:
“The clear lift in economic activity continues to unfold,” said Stephen Koukoulas, Economic Advisor to Dun & Bradstreet.
“Expected sales have risen strongly since the middle of 2013 and are almost three times the 10-year average, suggesting that economic growth is poised to rise to an above trend pace when the official data for the first half of 2014 is released,” he said.
“Encouragingly, the recent gains in expected employment have consolidated at a more favourable level, and the capital investment outlook has maintained its improvement.
“The only slightly disappointing note is a marginal pull-back in expected profits, but it should be noted this tick lower is from a high base,” Mr Koukoulas noted.
But examine each of those charts and you will see that high business expectations for the future have, in recent years at least, all marked turning points for weaker conditions, not stronger. This is likely because consumer confidence leads business confidence and for the past few years every time business has enjoyed the relief of new demand, it has quickly reversed, leaving business hope stranded.
I have my doubts it will be different this time with consumer confidence already having lost all of its post-election gains:
Full report here.
