VECCI's latest Business Trends and Prospects Survey shows that, in the June quarter of this year, the short-term business outlook had declined nationally but improved slightly at a State level.

VECCI's Chief Executive Officer, Mr Neil Coulson, says the survey of a cross-section of Victorian businesses was taken in mid-June 2004. This was after the Victorian Government's Economic Statement, at a time when VECCI was strongly arguing that for Victoria to continue to prosper, vital infrastructure projects must be tackled expeditiously and business costs cut to ensure our continued competitiveness with other States.

"Encouragingly, the survey recorded improved trading conditions over the June quarter 2004, with rises in sales, selling prices, employment and investment recorded. The disappointing trend in profitability and decline in exports reflected strong wages growth, a still recovering global economy and, in some cases, the higher Australian dollar.

"VECCI's Business Sentiment Index for the Australian economy declined over the June quarter, signalling a waning in the business community's perceptions of the national economic outlook for the next twelve months, with 23 percent of respondents anticipating that the Australian economy will experience stronger growth over this period.

"In terms of local prospects, 17 percent of surveyed businesses believe the State economy will experience stronger growth during the next twelve months, up slightly from the 16 percent of respondents holding this view in the March quarter 2004 survey. In all, 30 percent of those surveyed anticipate Victoria's economic performance will be weaker during the next twelve months, a decrease on the March quarter survey when 34 percent of respondents held this view.

"The Government's Economic Statement was timely in light of these survey results, although the effects of these decisions will take some time to feed through - it is also crucial that, in future, all Government regulatory and policy decisions are consistent with the growth framework outlined in the Statement", says Mr Coulson.

Summary of Results from VECCI Business Trends and Prospects Survey

• Trading conditions improved during the June quarter 2004, with moderate rises in general business conditions, sales, selling prices, employment and investment recorded. However, profitability and overtime declined, being impacted by the strong growth in wages and other labour costs recorded during the quarter. This trend is expected to continue over the September quarter 2004, with profitability and overtime anticipated to decline further, despite a continued improvement in general business conditions, as wages and other labour costs continue to rise. Sales, exports, selling prices, employment, and investment are also expected to increase over the coming three months.
  
  
• VECCI's Business Sentiment Index for the Australian economy declined over the June quarter, signalling waning optimism on the part of the business community in regard to the national economic outlook over the next twelve months. A total of 23 percent of respondents anticipate that the Australian economy will experience stronger growth over this period. This figure is lower than the March quarter 2004 survey, where 27 percent of respondents were expecting stronger growth.
  
  
• Those industries where a notable proportion of respondents remain optimistic that Australia's economic performance will strengthen over the twelve months to the June quarter 2005 include: recreation, personal and other services (34%), transport and storage (33%) and finance, property and business services (27%). In contrast, building and construction (27%) and manufacturing (22%) are industries where a sizeable number of respondents believe that national economic conditions will weaken over the near term.
  
  
• Victoria's growth prospects appear to have improved slightly over the June quarter. A total of 17 percent of surveyed businesses believe the State economy will experience stronger growth during the next twelve months, up from the 16 percent of respondents holding this view in the March quarter 2004 survey. Similarly, 30 percent of those surveyed anticipate Victoria's economic performance will be weaker during the next twelve months, a decrease on the March quarter survey when 34 percent of respondents held this view.
  
  
• On a net balance basis, industries where a notable share of respondents believe that the Victorian economy will experience stronger growth over the twelve months to March 2005 are education, health and community services (19%), recreation, personal and other services (19%), wholesale and retail trade (18%) and finance, property and business services (18%). Conversely, industries where a sizeable proportion of businesses consider that Victoria's economic performance will weaken over the twelve months to the June quarter 2005 include agriculture, forestry and fishing (45%), wholesale and retail trade (36%) and finance, property and business services (32%).
  

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VECCI Strategic Communications
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