Australian businesses are upbeat in the lead up to Christmas thanks to lower interest rates and a lower Australian dollar.
Businesses are expecting to see increased activity as the end of the year approaches, with profit, sales and employment activity all tipped to rise during the final quarter, Dun and Bradstreet's latest business expectations survey shows.
The percentage of businesses with a positive outlook has increased to its highest level since January this year, with 66 per cent of survey respondents feeling more optimistic about growing their business in the year ahead.
Retail continues to be the most optimistic sector in terms of sales expectations, with an index score of 51.5 points, against the aggregate score of 38 points.
Across all sectors, 49 per cent of businesses expect sales to increase during the fourth quarter, up from 46.8 per cent at the same time last year and up from 40 per cent in the third quarter.
Economist Stephen Koukoulas said the generally upbeat tone shows firms are benefiting from ongoing low interest rates and what is now a very competitive level for the Australian dollar.
However, he said actual sales, employment, profits and capital expenditure outcomes have fallen well below previous expectations.
"In other words, the generally upbeat view of the business sector has not translated into an actual lift in business activity," he said.
"This is something that has puzzled the Reserve Bank Governor Glenn Stevens for some time."
Mr Koukoulas said given the generally positive tone of business expectations, he expects the Reserve Bank will keep the benchmark interest rate steady at Tuesday's board meeting.
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