The latest Visa-VECCI Business Trends and Prospects Survey shows that both the short-term national and state economic outlook have improved as our long drought shows signs of breaking.
VECCI's Chief Executive Officer, Mr Neil Coulson, says the survey of a cross-section of Victorian businesses taken in mid-June 2007 revealed that 32 percent of those surveyed anticipate that Australia's economic performance will be stronger during the next twelve months, up from 27 percent in the March quarter 2007 survey. Twenty eight percent of surveyed businesses believe the State economy will experience stronger growth during the next twelve months, up from 22 percent in the March quarter survey.
"Trading conditions improved during the June quarter – while improvements in general business conditions, sales and employment were reported, with stable selling prices and exports. Profitability fell slightly, possibly influenced by higher wages and other labour costs as a result of ongoing labour shortages", says Mr Coulson.
"With early signs of the drought breaking in the Eastern States, regional survey respondents generally reported stronger results in key business indicators compared with metropolitan based businesses.
"Regional survey respondents were also more optimistic about the outlook for both the Australian economy and the Victorian economy than their metropolitan counterparts, reversing the sentiment indicated in the previous quarterly survey, when regional respondents were more pessimistic.
"The challenge for State and Federal Governments will be to continue this momentum – this can only be achieved by sound economic management, reductions in business costs and investment in infrastructure projects such as the Port Phillip Bay Channel Deepening Project", says Mr Coulson.
Summary of Results from Visa - VECCI Business Trends and Prospects Survey
- Trading conditions for Victorian business were mixed during the June quarter 2007. Survey respondents reported strong improvements in general business conditions and sales over the quarter, while selling prices and exports remained stable. However, widespread wage growth continued and a slight overall decline in profitability was reported.
- Stronger trading conditions are anticipated over the next three months, with general business conditions expected to improve, along with sales, selling prices and profitability. Investment in plant and equipment is expected to increase slightly, while a small decline is anticipated in investment in buildings and structures.
- VECCI's Business Sentiment Index for the Australian economy improved over the June quarter 2007, with an increase in the proportion of respondents anticipating stronger economic growth over the next 12 months. A total of 32 per cent of survey respondents indicated that they expect stronger economic growth, up from 27 per cent in the previous quarterly survey, and 19 per cent in the June quarter 2006. At the same time, 59 per cent of respondents expect no change in national economic conditions and just 9 per cent anticipate a weakening.
- Business confidence in the outlook for the Victorian economy also improved, mirroring views at the national level. A total of 28 per cent of respondents in the June quarter 2007 expect stronger State economic conditions over the year ahead (up from 22 per cent in the previous quarter and 15 per cent in June 2006).
- Over the past quarter, regional survey respondents generally reported stronger results in key business indicators compared with metropolitan based businesses. While both reported improved general business conditions and sales, growth was more widespread among regional businesses. While selling prices declined for metropolitan respondents (-2 per cent net balance), they improved for those in the regions (4 per cent). While regional businesses reported a limited increase in profitability, metropolitan respondents reported a slight decline.
- Regional survey respondents were also more optimistic about the outlook for both the Australian economy and the Victorian economy than their metropolitan counterparts, reversing the sentiment indicated in the previous quarterly survey, when regional respondents were more pessimistic
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