VECCI's latest Business Trends and Prospects Survey shows that, in the March quarter of this year, the short-term business outlook had declined at both a State and national level.
VECCI's Chief Executive Officer, Mr Neil Coulson, says the survey of a cross-section of Victorian businesses was taken in mid-March 2005, and indicated waning business confidence going forward.

 

"VECCI's Business Sentiment Index for the Australian economy fell over the March quarter, signalling a deterioration in the business community's perceptions of the national economic outlook for the next twelve months, with only 18 percent of respondents anticipating that the Australian economy will experience stronger growth over this period, down from 30 percent in the December quarter 2004.

 

"In terms of local prospects, while the survey was undertaken before the recent State and Federal Budgets, only 12 percent of surveyed businesses believed the State economy would experience stronger growth during the next twelve months, down from the 19 percent of respondents holding this view in the December quarter 2004 survey.  In all, 39 percent of those surveyed anticipated Victoria's economic performance would be weaker during the next twelve months, an increase on the December quarter survey when 27 percent of respondents held this view.

 

"Trading conditions were visibly weaker during the March quarter 2005, with falls in general business conditions, profitability, sales, and overtime being reported.  On a positive note, exports and employment showed strong growth and there were small increases in investment.   While seasonal factors no doubt played a part in this decline, slowing economic growth is also a factor.  Similar conditions are expected to prevail during the June quarter 2005, with general business conditions, profitability, sales, and overtime all expected to weaken.

 

"It is hoped that the business cost reductions and personal income tax cuts flagged in last week's State Budget and this week's Federal Budget will assist in boosting business confidence.

 

"Over the coming year, we will be looking for the correct policy settings that deliver sound economic and fiscal management, further business cost relief, reductions in red tape for small business, infrastructure improvements and measures to address skills shortages," says Mr Coulson.

 

Summary of Results from VECCI Business Trends and Prospects Survey

Trading conditions were visibly weaker during the March quarter 2005, with falls in general business conditions, profitability, sales, and overtime being reported.  On a positive note, exports and employment showed strong growth and there were small increases in investment.   While seasonal factors no doubt played a part in this decline, slowing economic growth is also a factor.  Similar conditions are expected to prevail during the June quarter 2005, with general business conditions, profitability, sales, and overtime all expected to decline.  In contrast employment, exports, and selling prices are forecast to improve.  

 

VECCI's Business Sentiment Index for the Australian economy fell over the March quarter, signalling a decline in the business community's perceptions of the national economic outlook over the next twelve months. A total of 18 percent of respondents anticipate that the Australian economy will experience stronger growth over this period. This figure is much lower than the December quarter 2004 survey, where 30 percent of respondents were expecting stronger growth.

 

Those industries where a notable proportion of respondents consider that Australia's economic performance will weaken in the twelve months to the March quarter 2006 include the wholesale and retail trade (48%) and transport and storage (38%) sectors. 

 

In contrast, those industries that consider Australia's economic performance will strengthen over the twelve months to the March quarter 2006 include finance, property and business services (28%), agriculture, forestry and fishing (23%), and manufacturing (20%).

 

Victoria's growth outlook also weakened over the past three months, with a total of 12 percent of surveyed businesses anticipating that the State's economy will experience stronger growth during the next twelve months, down from the 19 percent of respondents holding this view in the December quarter 2004 survey.

 

Industries where a sizeable proportion of businesses consider that Victoria's economic performance will weaken over the twelve months to March 2006 include wholesale and retail trade (51%), and transport and storage (50%).

 

Conversely, industries where a notable share of respondents believe that the Victorian economy will experience stronger growth over the twelve months to March 2006 are finance, property and business services (20%) and recreational, personal and other services (19%).