Lower Interest Rates Are Having No Impact On Investment Decisions
FOR IMMEDIATE RELEASE
Survey of Australian CFO’s Reveals Lower Interest Rates Are Having No Impact On Investment Decisions
Adept Profit Builders, A Forensic Cost Analysis practice in Sydney, recently completed their Findings report of the annual “Australian CFO Expectations Survey” for 2019. Subtitled “Steady as she goes, with a few bumps ahead” the conclusions of the Findings Report show that “In general, the expectation of CFOs and Heads of Finance is that the economy will remain essentially in the same state for the next twelve months but exerting some negative influence on company performance. Interest rates are considered to be of little further consequence given the substantial easing over the last decade and the nominal rate now prevailing.”, said Gary Bigelow, Managing Director of Adept Profit Builders.
The findings highlighted that while the general sentiment among Australian companies is that the economy will remain steady over the coming 12 months, 55% felt the economy would negatively impact their business performance. “Given 91% felt interest rates would have no impact on sales over the next 12 months this strongly suggests companies are expecting margins to be squeezed”, said Bigelow.
In response to questions relating to the impact of the current interest rate trend 91% believed falling interest rates would not impact sales suggesting consumers are likely to “keep their hands in their pockets” rather than spend tax cuts. More importantly 64% believe falling interest rates will not impact on their capital acquisition decisions.
The news for employment expressed in the survey outcome was also not good with 27% freezing new hires and replacement hires and another 36% having no plans to alter their headcount. While 36% said their headcount would match growth expectations this must be read in context of the overall position that growth will remain steady at its current sluggish rate.
These results are echoed in todays press reports of the expectations expressed by Peter Costello, Chairman Future Fund, who said on Thursday "Now, what will a rate cut do for the economy? In my view, not much. We've already got a cash rate of 1 per cent, suppose it goes to 0.75 per cent, suppose it goes to 0.5 per cent. All these people who are holding off spending or borrowing or investing are going to say 'I wouldn't have done it at 1 per cent, but I'm going out there now that it's 0.75 per cent?' I don't think that's going to happen."
The Australian CFO Expectations Survey 2019 Findings Report was released today to respondents and clients of Adept Profit Builders and is available for download on our web site at https://adeptprofitbuilders.com/gallery/Australian%20CFO%20Expectations%20Survey%202019%20Findings.pdf
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