National Australia Bank’s (NAB) SME Quarterly Survey (June 2010) found that business conditions, profit growth and the cash flow position of Australia’s small to medium-sized enterprises deteriorated for the second consecutive quarter in June.
The survey of more than 700 SME businesses showed that business conditions fell 4 index points to 1 in the June quarter, the lowest reading in 12 months.
This was largely driven by reduced customer confidence impacted by the uncertainty of economic shocks in Europe, volatile financial markets and the local impact of rising interest rates during the quarter.
Geoff Greer, Executive General Manager, nabbusiness, said that SMEs are experiencing tougher conditions.
“Our survey shows that business conditions for SMEs continued to decline from the post-GFC peak in December 2009,” Mr Greer said.
All states except Victoria recorded flat or declining SME business conditions, with the Australian average falling from 5 points to 1 point. Customer confidence, the key driver of sales activity, fell significantly in the June quarter, from 15 to 2 index points, the lowest level in the last 12 months.
“Businesses are being impacted as consumers remain cautious. The government stimulus continues to fade and there is a lull before private sector investment begins to ramp up. These trends were more evident in retail, transport as well as property and construction as we see projects mature at a time of weak building approvals,” Mr Greer said.
“The economic troubles and sovereign debt crisis in Europe, which we flagged as a concern last quarter, appear to be influencing SME sentiment with many expecting a more protracted recovery, resulting in more neutral sentiment and a lower profit outlook.
“Retailers responded by offering more favourable sales terms, which moderated sales but adversely impacted cash flow. Although, recently we have seen a bounce in retail sales figures that are supported by a positive 12-month outlook from businesses.
