Victoria, Australia: According to the latest VECCI-Commonwealth Bank Survey of Business Trends and Prospects, Victorian business conditions moderated over the three months to June 2010.
The survey showed business confidence continues to fall as Victorian businesses face a decline in profitability, resulting from low sales, discounted selling prices and rising labour costs.
The VECCI Business Sentiment Index indicated that 33 per cent of respondents anticipate stronger economic growth for the Australian economy over the next 12 months, compared with 52 per cent of respondents in the previous quarter.
It is a similar story for the outlook of the Victorian economy, with 29 per cent of respondents expecting stronger state economic conditions over the year ahead, a visible decline on the 44 per cent of respondents that expected growth in the previous quarter’s survey.
Although the outlook for the Victorian economy has moderated, it is an improvement on results recorded at the same time last year when the global financial crisis was impacting on business confidence and 23 per cent of respondents forecasted growth.
Over the coming quarter, businesses expect an improvement in sales, exports, selling prices and employment levels. However, increases in wages and other labour costs are expected to continue. Any growth in profitability and investment is expected to be marginal at best.
VECCI CEO Wayne Kayler-Thomson said the increasing pressure on labour costs, combined with the slow economic recovery and ongoing caution among businesses is cause for note among decision makers, including the Reserve Bank and its decision on interest rate settings.
“It is important that governments continue to reduce costs on business and give priority to ongoing regulatory reform,” Mr Kayler-Thomson said.
“This also highlights the ongoing issue of skill and labour shortages, and business will be closely watching any announcements made by the two major parties in respect of how they intend to address this issue.”
Sue Tindal, General Manager Corporate Financial Services Victoria Commonwealth Bank, agreed that Victorian business owners are still finding business conditions tough despite expectations that conditions will improve over the coming quarter.
“Business owners in Victoria are still being negatively impacted by the flow-on effects of the global financial crisis, which is still taking the wind out of the Victorian economy’s sails.
“They’re also struggling to make ends meet due to increasing cost pressures such as wages which are trending higher due to the improvement in the jobs market,” said Ms Tindal.
Source:http://www.vecci.org.au/news/Pages/default.aspx?year=2010&cat=Results
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