Trading conditions for small business improved in the three months to September, but could be dashed if interest rates are lifted for the third month in a row, a new survey shows.
The Australian Chamber of Commerce and Industry (ACCI) small business survey showed business conditions rose 6.7 points to an index of 49.1 in the September quarter, its highest level since the March quarter 2008.
Sales, profitability and employment all improved during the September quarter, while investment in plant and equipment lurched into positive territory.
ACCI director of economics and industry policy Greg Evans told reporters in Canberra that the results signal we are heading in the right direction, but that there were “continuing storm clouds” on the horizon.
“We would be concerned about a third rate increase in the December quarter, especially as that could crimp demand running up to Christmas,” he said.
The newly releases minutes of the RBA’s latest board meeting point towards a possible third rate rise, with the central bank leaving the door open for a further rise in the cash rate.
“Looking ahead, members expected that if economic conditions evolved as expected, further gradual adjustment in the cash rate would most likely be appropriate over time, though the pace of the adjustment remained an open question,” the minutes said.
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