Conditions For SMEs Worsen - ACCI Small Business Survey
17 August 2010
Australia's largest and most representative business organisation, the Australian Chamber of Commerce and Industry (ACCI) says the latest results of its quarterly ACCI Small Business Survey underscores the unevenness in Australia's economic recovery and highlights the significantly different business conditions experienced by small enterprises compared to larger businesses in the June quarter.
The surveys' Small Business Conditions Index fell almost three points below the important 50 level in the June quarter from 50.1 to 47.4 over the June quarter.
ACCI's Director of Economics and Industry Policy, Greg Evans commented that,"small business sentiment and operating conditions have shifted downwards amidst increasing uncertainty about the strength of the global recovery and official interest rate hikes during the quarter."
"The ACCI Small Business Survey provides clear evidence that small business performance in general is still lagging behind their larger counterparts. We are not only seeing the characteristics of a two speed economy, but also a concerning gap opening up between the outlook for small and larger businesses."
The unevenness of the recovery for SMEs compared to larger businesses was also highlighted by other small business indicators examined by the survey which all fell and remained at contradictory levels while growing for larger enterprises, including Business Sales, Sales Revenue, Profit Growth, Employmentt, Overtime Utilisation and Investment in Plant and Equipment.
The ACCI Small Business Survey also found that:
- Insufficient Demand replaced Business Taxes and Government Spending as the Number 1 constraint on small business investment for the first time since November 2001
- The optimistic expectations of small businesses about Australia's economic growth over the next twelve months are receding with the index of Expected Economic Performance falling from 57.8 to 53.0 over the June quarter
- Small business expects business investment to continue to be weak, with the Investment in Building and Structures and Investment in Plant and Equipment indicators remaining negative over the next three months
"Continued weakness in sales and selling prices, coupled with the rising costs of labour and finance, has put significant downward pressure on small business profitability and limiting small business expansion and investment. The survey also highlights that the rebalancing of growth driven by the private sector is yet to materialise. This provides a strong case for the Reserve Bank to stay on the sidelines for the rest of 2010," Greg Evans said.
"Looking ahead it also, it also puts even more impetus behind the need for meaningful tax reform which restores greater incentive and reward risk-taking by business, especially SME owners and operators."