Business confidence falls sharply

Confidence among small and medium sized businesses has fallen sharply to its lowest level in more than five years, according to the latest Sensis Business Index (SBI). Concerns over consumer spending and demand saw confidence fall 17 percentage points during the June quarter. This comes off the back of a nine point fall in the previous quarter, taking confidence to a low not seen since February 2009.

The SBI, based on extensive research of 1,800 small and medium enterprises (SMEs) and reported as a net balance (positive minus negative), also revealed significant concerns about the current state of the economy. SMEs were more than twice as likely to believe the economy was currently slowing as growing. Just 15% felt the economy was growing compared with 34% who felt it was slowing.

Christena Singh, Sensis Business Index report author, said: "The report paints a picture of weak confidence levels across both current and future perceptions. Current perceptions of the economy are also falling and were at a net balance of negative 19%. This is the second consecutive quarterly fall. In addition, there was a fall in the proportion of firms that felt the economy would be better in a year’s time."

Ms Singh added that performance indicators fell for sales, wages, capital expenditure and profitability with an increase only for employment and no change for prices. In the short term, SMEs were expecting falls in all indicators except capital expenditure while they expect all indicators to fall in the coming year.

Confidence fell in all States and Territories, except for Tasmania, which was the only State to record an increase in confidence. Victoria saw the lowest confidence level, while Western Australia experienced the biggest fall in confidence, a drop of 26 percentage points.

For information contact: Darren Behar 0458 001 296 or Kim Wiener 0421 191 785.