The confidence of Australia's executives is showing clear signs of improvement, according to the latest Dun & Bradstreet (D&B) Business Expectations Survey released on Tuesday.

Confidence is returning to the Australian economy and the outlook for the back half of the year is promising, said D&B chief executive officer Christine Christian.

"The latest survey shows that five key indicators of business strength have improved relatively significantly, with certain indexes rising to the highest level in six and seven years."

Solid expectations for growth in sales, profits, inventories, capital investment and selling prices during the December quarter. However, firms remain subdued on hiring intentions.

According to the survey, the D&B profits index has reached its highest level in six years, adding 10 percentage points since the September quarter to a reading of 22.

Over one third of firms, at 34 per cent, anticipate profits will increase during the December quarter, while 12 per cent expect a decline.

Expectations for improved sales are driving the rise in the profits index. Forty seven percent of firms expect an increase in sales in the December quarter 2010, while 14 percent anticipate a decrease. Solid expectations for the December quarter follow relatively solid June quarter figures - 30 percent of firms increased sales compared to the prior year.

The most significant increase in expectations has come from the retail sector where the sales index rose 25 points to 34. The durables manufacturers' sales index also rose substantially, climbing 21 points to an index of 33.

The survey found inventories confidence at its highest level in more than six years, increasing five points since the previous quarter.

Twenty one per cent of executives planned to increase inventories in the December quarter, while nine per cent plan to reduce stock levels.

According to the report, capital investment expectations rose to an index of 18, a rise of five points.

"Twenty three per cent of executives expect to increase spending in this area, while five per cent expect to cut their level of investment," the report said.

The selling price expectations index rose by three points to 20, with 26 per cent of executives expecting to lift prices during the December quarter, while six per cent expect to cut prices.

Despite growth in all other areas, employment expectations were unchanged from the September quarter this year.

The survey found 11 per cent of firms are planning to increase levels of staff, while six per cent plan to trim staff numbers.