Small business conditions fall to record lows


Small business conditions deteriorated over the March quarter, falling from 35.7 index points to 33.1, according to ACCI survey

Small business conditions deteriorated over the March quarter, falling from 35.7 index points to 33.1, according to the Australian Chamber of Commerce and Industry (ACCI).

The May ACCI Small Business Survey shows the index falling to its lowest level since the survey began in 1996, and almost 20 points below its five-year average of 52.2.

From sales revenue to employment, all areas are predicted to remain in negative territory for the next three months.

ACCI Director of Industry Policy and Economics, Greg Evans, says expectations for a recovery are low, and the Government needs to step-in.

"Over the March quarter, small business experienced further worsening in business conditions and employment growth. Looking ahead, unfortunately small business remains pessimistic about a quick turnaround in business conditions," he says.

However, he says the recently announced 50 percent temporary bonus tax deduction for small businesses will encourage investment.

"The next focus of the government should be the least costly area of reform – reducing compliance costs and the red tape burden on small businesses.

"The RBA may have been too cautious to date in lowering rates. The ‘green shoots’ of recovery are not yet evident across the small business landscape and thus further reductions in business lending rates would be of considerable assistance in rebuilding confidence," Evans says.

Expected economic performance declined to a new historic low of 24, mirroring business owners’ unease over Australia’s rate of growth.

Sales revenue continued the sinking trend, plummeting to yet another record low of 35.7, down from 39.4 in the December quarter.

Wage growth and non-wage labour costs continued to moderate at 51.5 and 51.4 respectively, yet are still well below their five-year averages of 64.7 and 64.4.

Selling prices fell from 51.2 index points to 47.2 since December, with the downward trend expecting to continue over the June quarter.

It comes as no surprise that profit growth also suffered losses, dropping to 32.1, down from 33.9 last quarter, and 43.6 one year ago.

Employment and overtime utilisation indexes declined to 39.6 and 37.4 respectively, significantly below their five-year averages of 52.1 and 51.3.

Finally, investment in buildings and structures, and investment in plant and equipment fell to 36.3 and 38.4 respectively, compared to last quarter results of 40 and 42.4.

In general, small and medium businesses reported more favourable conditions compared to large businesses.

The ACCI Small Business Survey investigates the business conditions and confidence of 2,821 Australian businesses on a quarterly basis.

For a full copy of the results, go to www.acci.asn.au.

You can also follow our updates by joining our LinkedIn group or liking us on Facebook