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Victorian business confidence falls despite improved sales and profitability

September 03, 2012

Victoria recorded the largest drop in confidence of any state or territory during the quarter, more than halving from its high point in March this year.

“This quarter has seen more Victorian businesses report an improvement in sales, prices and profitability, however this has been at the expense of employment and capital expenditure and offset by increased wages,” she said.

“There’s no doubt that some businesses are facing tough conditions at the moment, with many saying they are concerned that people aren’t spending, but looking ahead there are signs that business expects conditions to improve in most areas in Victoria over the next 12 months.”

Businesses in Victoria are expecting an increase in sales in the next quarter along with improved profitability, however they are expecting to increase their prices to achieve this. They also plan to reduce capital expenditure.

Nearly five in ten Victorian small and medium businesses are confident about their business prospects over the coming year, whereas three in ten are concerned (up from just over two in ten last quarter).

The key concerns nominated by Victorian small and medium businesses were a lack of work or sales and the economic climate. Small businesses in Melbourne are more confident than their regional counterparts.