The quarterly Sensis Business Index, which takes the pulse of Australian small to medium businesses, was released today with indicators showing confidence growth in the retail sector.
Though overall confidence among the 1,010 small and medium sized businesses polled fell slightly this quarter, the results remain the second highest level seen in the past seven years.
SMB confidence eased two points to a net balance of +44. Except for last quarter, there has been no higher balance since March 2010 when it was +49.
“While perceptions of the economy remain strong, less than one in seven businesses have faith in the Government’s policies, with the biggest concerns being excessive bureaucracy and red tape, as well as there being too much of a focus on the interests of big business,” commented Sensis Chief Executive Officer, John Allan.
The report states that the past two quarters have seen swinging confidence observed across all industries, however six in ten sectors currently have high levels of confidence. According to the report the Health and Community sector is the most optimistic, with SMBs in retail trade, manufacturing and hospitality all finding current economic conditions difficult.
The net balance score for current perceptions of the economy now sits at +2, while the expectation for the economy in a year’s time have risen to +10.
“When we look at the key indicators, sales, employment, wages and prices are all positive, while profitability has also improved, despite still recording a negative score. When you mix these results with the fact that business confidence remains at one of the best levels we’ve seen in the past seven years, it’s not surprising to see the long term economic sentiment improve,” said Mr Allan.
There was a two-point fall nationally for overall business confidence, with the score now sitting on +44. This score is the second best result recorded since March 2010, demonstrating an overall upward trajectory for business confidence across the past seven years.
Confidence trends in the retail trade sector did increase during the past quarter by nine points to +23, however it still has second lowest overall industry confidence level. The sector has shown a jump in confidence on pricing for the quarter, jumping from the current +15 to a robust +27.
Expectations for profitability indicate the retail sector is in a positive position, achieving a +7 net balance. The report also reveals that 60% of SMB’s are feeling confident based on being a well established, solid business with specific business strengths. Comparatively 16% of SMBs are concerned due to deceasing sales and an unfavourable business, economic or industrial environment.
The report also demonstrates a notable discrepancy in confidence between SMBs based in capital cities versus those in regional areas. “Overall more businesses in the capital cities are feeling confident and it comes down to their perceptions of the economy. They believe the economy is travelling well, whereas more regional business owners feel pessimistic,” said Mr Allan.
To read the full report please follow the link provided HERE