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Trading conditions may be at a high, but businesses are losing confidence following interest rate rises.

The quarterly survey by Sensis also reports stronger consumer demand and constant profitability for SMEs.

“After four quarters of weak results, capital expenditure investment improved strongly during the quarter,” says Christena Singh, report author. “However, employment declined marginally, but is still at a level well in excess of this time last year.”

With an interest rate rise occurring during the survey period, the report also directly covers the impact of rate rises on business confidence.

“Business confidence for those small businesses interviewed before the interest rate rise was 63 percent, which meant we would not have seen business confidence at a higher level since August 2004,” says Singh. “However, business confidence for small business interviewed after the interest rate rise fell to 58 percent.”

Despite the findings, not all is bad. “Expectations for the trading conditions in the short and long term are the strongest we have seen in many quarters,” explains Singh. “It appears that despite small businesses believing the economy will be worse off, they do not feel this will impact greatly on their own business performance.”


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