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SME Confidence graph

SME confidence and conditions recover

After falling to its lowest level in three years, SME confidence has improved in the September quarter, and is now in line with larger businesses.

According to the NAB Quarterly Survey, confidence amongst SMEs was up eight points – to -3 – in the September quarter.

Although the index is still below-average, it signals a strong recovery of confidence after the previous quarter. For the first time in two years, SME confidence is consistent with that of larger business.

The survey found that SME confidence improved across all industries, with the exception of transport and utilities. Wholesale saw the most notable increase (+ 15 points), while property, business and financial services also did well.

Sentiment remained subdued in health services, however, and may reflect concerns about potential cut backs to public sector spending.

In terms of states, confidence remained strongest in Western Australia. There were also notable improvements in South Australia (up 13 to -3 points), Victoria (up 12) and New South Wales (up 11).

‘While it’s encouraging to see an uplift in both conditions and confidence over the past quarter, it’s important to acknowledge that conditions remain challenging for many sectors,’ said NAB Business executive general manager Daryl Johnson.

“SME’s have been fairly conservative in running their business over the past 12 months and will remain to do so until we see notable improvements in the macro economic environment. Structural change remains prevalent across many sectors, with many SME’s adapting and positioning their business accordingly,’ he added.

This was reflected by the large number of SMEs who sought to strengthen their competitiveness, in the last 12 months, by developing new strategies.

According to the survey, 60 percent of SME’s said they had made improvements to their website or developed additional online capability to improve their competitiveness in the market, while others launched new products, engaged in online marketing, and reduced pricing.

“We would encourage SME’s to continue investing in their business whether that be in their supply chain or new product areas in order to keep up with the rate of change they’re facing, and to allow them to adapt, innovate and grow into the future,’ said Johnson.