SMB confidence hits a 4 year high

| October 30, 2017

Mid-sized businesses are more confident about the economy today than any time over the last four years.  29% of Australia’s small and mid sized businesses believe the economy is growing, with only 16% seeing decline, creating the best net balance in the Sensis Business Index since the end of 2013.  31% believe it will be better in a years time, while only 15% believe conditions will deteriorate.  These figures have been matched only once since March 2010.

Sensis CEO John Allan believes “Small and medium businesses see strength in the economy and this is revealed in their assessment of the key indicators, four of which – prices, sales, employment and wages – saw a rise in the net balance score last quarter.  Key indicator expectations for the current quarter remain positive. All expectations were higher and above the national average with the exception of wages.”

The Index charts the views of 1,000 small and mid-sized firms across Australia and shows that NSW firms are the second most confident after their peers in the ACT.  NSW confidence rose four points to +50 in the last quarter, tying with Victoria and Tasmania, and stands 4 points above the national average of +46.   Across the nation, each state and territory saw a rise in business confidence, except in WA where the score remained the same. 

Although remaining below the national average, confidence in Queensland rose 7 points at +42 and South Australia was up 10 to +36, despite the closure of its last car plant.   Confident firms across Australia tend to have established, solid business, healthy sales and specific business strengths, while worried SMBs saw falling sales or an unfavourable business environment as their key concern.

Although regional NSW businesses are 6 points more confident than their Sydney counterparts, and remain the most confident regional business group in Australia, the gap has closed significantly with confidence in Sydney rising 20 points to +48 while regional business confidence dropped 19 points to +54.  There was a similarly striking 24 point swing in confidence between metropolitan and regional SMBs across the nation.

SMB support for the state government policies declined 2 points but remains marginally positive although NSW firms worried about the pace of infrastructure development, excessive bureaucracy and an over-concentration on big business.  NSW support for the Federal Government slipped 2 points to +5 but remains 2 points higher than the national average.

Businesses backing Federal Government policies fell from 22% to 18%, while those believing its policies work against small business declined slightly from 16% to 15%.  SMBs which were unimpressed with the Federal Government’s policies cited too much bureaucracy, a bias towards big business and excessive taxation. Those with a favourable assessment believed the Federal Government supports and is interested in smaller businesses and is making an effort to reduce tax and increase tax incentives.

All sectors continue to have a positive net balance with half of the industries surveyed improving this quarter. The Hospitality sector’s business confidence score almost tripled from +21 to +62, for example, while the Transport and Storage sector enjoyed a 26 point rise. Conversely, Retail Trade languishes at the bottom on +16, dropping 1 point.  The run up to Christmas will be crucial for smaller retailers fearful of the threat of online shopping, while Hospitality and Cultural, Recreational and Personal Services should prosper at this time.