Eighty-seven percent of Australia’s small and medium businesses now think the economy is either slowing (35%) or standing still (52%), while only 13 percent think it is growing, according to the latest Sensis Business Index (SBI) survey.

The net balance score of -22 is down five points this quarter and is the lowest score in 12 months. At the state and territory level, net balance scores ranged from -2 in the ACT to -46 in Western Australia, where there was a 12 point decline this quarter.

Sensis Chief Executive Officer, John Allan said: “More than three times as many businesses think the economy is slowing as those who think it is growing. The projections for the economy in a year’s time have also deteriorated by 13 points, moving from positive to negative territory.”

The Index, which reflects the views of 1,000 small and medium businesses from across Australia, also showed that support for the Federal Government remains relatively strong at +6, after falling one point on a net basis.

“The Government’s rating is currently 14 points better off than it was at this time last year, placing it in a good position with small and medium businesses as we possibly head to an early election.

“The halo effect of the new Prime Minister seen last survey appears to have now evaporated however. In the December survey eight percent of SMBs spontaneously mentioned the new Prime Minister as having a positive impact on their perceptions, but that figure is now less than one percent.

“Tax incentives are a growing influence on those with a positive assessment, while excessive red tape is the key concern of those who are worried,” said Mr Allan.

Business confidence fell slightly this quarter (+39 to +35), but remains in a healthy position, with 55 percent of businesses feeling confident as opposed to 20 percent who are worried. At this time last year the score was eight points lower (+27).

“Positive wages and prices results helped influence confidence, while on the other hand there were negative ratings for sales, employment and profitability. A lack of work or sales again dominated as the key concerns for SMBs, while half reported barriers to taking on new staff,” said Mr Allan.

At the state level, New South Wales has overtaken Tasmania to be the most confident region in Australia, while South Australia went further backwards and remains in last place.

“The results were mixed this quarter with New South Wales, the ACT, Victoria and the Northern Territory showing slight improvements, while the other states saw declines. The biggest fall occurred in Western Australia where the deteriorating business environment was behind a 20 point fall in confidence.

“The Tasmanian Government is now the most popular in Australia, with SMBs there happy with the Government’s efforts to reduce bureaucracy and red tape. The South Australian Government saw the biggest improvement this quarter but despite this it remains the least popular in the nation,” said Mr Allan.

At a local level, confidence fell seven points in the metropolitan areas (+44 to +37) but rose two points in regional areas (+29 to +31), with the gap between the two falling to six points.

“Despite the gap narrowing between the two the key performance indicators remain stronger in metropolitan areas, particularly for sales and profitability which posted results almost twice as high as those for regional areas,” said Mr Allan.

There was a reversal in confidence in the Northern Territory, with businesses in Darwin (+32) now more confident than those in regional areas (+23). Meanwhile, businesses in regional Victoria closed a 13 point gap to now be as confident as those in Melbourne, both on +39.

The sector results were varied, ranging from a 12 point rise in confidence in wholesale trade, to a 20 point fall in the building and construction industry. The health and community services sector lost some ground but remains comfortably in top spot.

The transport and storage sector experienced the worst conditions for both sales and wages. This saw the sector fall eight points in terms of confidence to now sit in last place.  

The Sensis Business Index uses a net balance score which is the difference between the percentage of businesses with a positive outlook versus the percentage with a negative outlook.

Small and medium businesses comprise 99 percent of all businesses operating in Australia.