Australian businesses braced for a downturn -Â The Age 10-6-08Â Â AUSTRALIAN businesses are bracing for a bleak September quarter as the price of oil continues to hover near record levels.
The main oil futures contract eased marginally to $US137.48 a barrel in Singapore yesterday, just shy of the record $US138.54 a barrel it hit on Friday night. However some experts are still tipping it will head to $US150 a barrel or more by the end of the year.Tony Hayward, the chief executive of energy giant BP, declared the era of cheap energy was over, with oil production failing to rise fast enough to meet demand.
"Producers are being hampered by 25 years of low investments, because of low prices," he told a conference in the Malaysian capital Kuala Lumpur.
"The result is a supply chain being stretched to breaking point."
Oil's volatile ride and negative economic news on Wall Street on Friday night sent shivers through Asian stockmarkets yesterday.
Japanese share prices fell 2.13 per cent.
 The benchmark Nikkei-225 Index closed down 308.06 points at 14,181.38.
The Hong Kong stockmarket was closed for the Queen's Birthday holiday.
However in early trade in Europe last night, Britain's FTSE, the Paris CAC 40 and Frankfurt's DAX 30 were showing only modest falls and later traded slightly up.
 Futures trading suggested the US market might rebound.
Some experts believe investors may be in for a rocky ride when the Australian market re-opens today.
"If the drop continues in the US, Australia will have two days' drop to make up," said CommSec chief economist Craig James.
As well as sharemarket nervousness, business executives fear high fuel prices, inflationary pressures and sluggish consumer spending will soon eat into profits with a rapid slowdown in economic activity tipped in the coming months.
The latest Dun & Bradstreet National Business Expectations Survey reveals businesses expect sales, profits, employment growth and capital investment to dive sharply in the three months to September.
Surging fuel prices are now hurting 82 per cent of businesses surveyed and the number feeling pain from the consumer spending slowdown has risen to 38 per cent.
In response to those pressures, 57 per cent of executives now expect to increase selling prices in the second quarter to September 30, supporting expectations that inflationary pressure will continue throughout this year.
Businesses expect a "steep decline" in sales, profits, employment growth and capital investment in the September quarter, the D&B survey shows.
Profit expectations have fallen and the employment indicator has hit its lowest level in 17 years, with 20 per cent of executives expecting to have fewer staff in the September quarter than a year ago.
 Just 10 per cent expect to increase staff levels.
Credit market turmoil is a major concern, with 67 per cent of firms surveyed saying a tightening credit market will have a significantly negative impact on their operations in the coming quarter.
About 25 per cent of executives rate the cost of fuel and another 25 per cent rate wages growth as the most important influence in the year ahead.
The D&B survey shows 40 per cent of firms had a fall in sales in the March quarter and 40 per cent see a fall in September-quarter sales.
"The business community is now anticipating a rapid slowdown in activity in the coming months," said Dun & Bradstreet chief executive Christine Christian.
"Adding to the list of challenges, better than expected GDP results for the March quarter have fuelled speculation regarding the need for a further rate rise."
CommSec's Mr James said it was risky to try to predict future oil price moves because it could just as easily rise to $US150-plus a barrel as a slip to $US100 a barrel.
"There are bubble-like tendencies in the market," he said.
"It would only take something like OPEC with a surprise decision to increase oil output or the US to announce that it would have the strategic petroleum reserves and the speculators would run for cover."
Iran's representative to the OPEC oil cartel warned yesterday that the crude oil price was set to rise to $US150 a barrel by the end of the year.
Goldman Sachs JBWere analysts last month predicted it would surpass $US140 this year and could average $US200 next year.
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