Confidence in the small business sector is continuing to wane, according to the latest NAB Quarterly Business Survey, as the global economic climate remains unstable and the prospect of new local taxes sit on the horizon.
Small business confidence dipped to -9 in the June quarter, down from -4 in the first quarter of 2012. By industry, Confidence fell heavily in business services, accommodation, cafes & restaurants and health, but improved marginally in the retail and transport sectors.
“Attempts by the RBA to restimulate the economy with 125bp worth of rate cuts since November appear yet to gain traction, and provided little relief to small business owners,” the survey said.
Sentiment fell in every state during the June quarter; with the most significant deterioration occurring in Victoria (down 11 to -13 points), followed by SA (down by eight points).
Western Australia was the only state to report positive confidence (+1) and the least confident states in the quarter were South Australia (at -15) as well as NSW and Victoria (both -13).
Small business conditions also weakened in the June quarter, falling from -4 to -7. Conditions weakened most considerably in health, manufacturing and property services, and improved marginally in construction, business services, accommodation, cafes & restaurants and retail.
Conditions were strongest in accommodation, cafes & restaurants, health and finance, and weakest in wholesale, manufacturing and retail.
“The weakness in activity largely reflected subdued employment conditions and profitability; trading conditions held up a little better, possibly aided by the tax compensation to households provided by the government through May and June. Profitability of the smallest SMBs now below GFC levels,” the survey said.
On a state-by-state basis, conditions were strongest in the mining states of Western Australia and Queensland. Conditions in Queensland rose marginally (up 2 to -1 point) and were unchanged in Western Australia at zero points.
The largest deterioration in conditions occurred in NSW (down 10 to -14 points).
