According to recent results from an ABS survey of business expectations, all key indicators of trading conditions are expected to decrease in the short term. In particular, profit is expected to decrease by 7.9% in trend terms in the March quarter 2002, while operating income, selling prices and employment are also predicted to weaken.

Interestingly, retail trade, accommodation, cafes & restaurants and finance & insurance businesses are expecting selling prices to rise in the short term, with property & business services expecting the largest deterioration. Retail trade and manufacturing businesses are expecting the greatest falls in profit.

However, more encouraging results are forecast for the medium term, with profit expected to rise by 10.7% and operating income and selling prices also expected to strengthen. Employment, however, is still expected to be marginally below current levels. Wholesale trade, manufacturing and mining businesses are expected the greatest improvements in profit in the medium term.