THE election of a coalition government and the upcoming silly season has businesses more confident of profit growth in coming months.
Profit expectations have jumped to their highest level since the beginning of the year, the latest Dun and Bradstreet Business Expectations Survey shows.
The profit outlook for the final quarter of 2013 is also noticeably stronger than in corresponding periods in 2012 and 2011.
The survey showed 28 per cent of businesses expect to increase their profits in the next three months, although seven per cent forecast a reduction.
Business expectations traditionally rise ahead of Christmas, but the outcome of the federal election had provided a further boost, Dun and Bradstreet corporate affairs director Danielle Woods said.
"Despite facing tough trading conditions throughout most of the year, businesses are indicating that they see some light at the end of the tunnel," Ms Woods said.
"There's undoubtedly been a boost from last month's change of government, with 65 per cent of businesses saying they are more confident about future business conditions."
Low interest rates as well as the falling Australian dollar also contributed to rising confidence.
The survey said 34 per cent of businesses expected a positive impact from the Aussie dollar's move lower, while eight per cent expected a negative impact, and 58 per cent expected no impact.
But concerns remained around investment and employment, with more businesses planning to reduce their levels of hiring and capital spending.
Dun and Bradstreet economic adviser Stephen Koukoulas said the survey pointed to a pick-up in economic activity and an eventual rise in interest rates.
"Low interest rates and the weaker Australian dollar are now showing up quite directly in activity and the mood of the business sector," Mr Koukoulas said.
"The positive signs for the economy from the survey all but close the door on talk of a further interest rate cut from the Reserve Bank.
"It would not be surprising that if these positive signals are sustained, the market will be pricing in interest rate rises in the early part of 2014 as the RBA works to normalise monetary policy."
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