Consumers not spending money, too much competition and an unpredictable market were the main reasons behind a drop in business confidence among Australia’s small to medium enterprises (SMEs), according to the latest Sensis Business Index (SBI) released today.
Based on extensive research of approximately 1,800 SMEs across Australia, with results reported as a net balance (positive minus negative), the SBI March quarter recorded a nine percentage points decrease in SME confidence levels. This comes off the back of a record 21 percentage points increase recorded after the Federal Election.
Sensis Business Index report author, Christena Singh, said while SME views on the current state of the economy have moderated from last quarter, overall they still represent an upward trend in the operating environment for SMEs.
"The last quarter was the strongest surge in confidence levels in the report’s 20 year history and while this quarter’s national average was +29%, it’s still more positive than it was one year ago."
Ms Singh said that for the year ahead, SMEs are expecting weaker results in sales, employment, wages, profitability and capital expenditure with prices remaining unchanged.
"On a positive note, SMEs are finding it easier to access finance which could be linked to the decreases in interest rates the past two years," Ms Singh said.
SME business confidence fell in most states and territories with South Australia and Tasmania falling by 21% and 12% respectively. Western Australia experienced the highest confidence level at 50%, with SMEs saying in the west that improved housing market and focus on their customers was boosting their confidence levels. Only the ACT recorded an increase in confidence, albeit minor.