Conditions and confidence rise among SMEs

According to NAB’s Quarterly SME Survey, business conditions rose to +4 index points, while business confidence increased to +5 index points in the quarter.

“Analysis by the size of SME businesses suggests that firms have generally experienced better conditions and confidence in the quarter, with the exception of conditions for mid-tier firms,” the NAB survey said.

“Despite a recent improvement, low-tier firms with an annual turnover of $2-3 million continued to under-perform consistently across major indicators relative to their larger counterparts. In particular, these firms fared poorly in their cash-flow conditions, with their cash-flow index falling by 11 points to -17 index points.”

Conditions across the states were mixed in the quarter, with New South Wales continuing to claim the top spot followed by South Australia and Victoria. Meanwhile, Western Australia and Queensland fared the worst in the quarter, according to the report.

“Conditions by industry continued to paint a mixed picture, with service-oriented industries maintaining momentum ahead of non-service industries in general,” it said.

“Property, business services and finance firms continued to do well, although conditions of property firms have moderated compared to last year. Conditions in manufacturing were largely unchanged around the neutral mark.

“Meanwhile, retail and construction … overtook wholesale and transport as the worst-performing industries in the quarter, with conditions in the latter two improving significantly, albeit still marginally negative.”

In terms of business confidence, the majority of industries showed improvement in the quarter except for manufacturing and accommodations, cafes and restaurants.

“Property and construction firms were the most confident in the quarter, while finance experienced the weakest [reading]. Confidence by health SME firms rebounded sharply from -21 to around the neutral mark this quarter, but this could prove to be a blip in the data due to a small sample size,” the survey said.