After the latest MYOB survey showed Australia’s small business owners feel they’ll never have enough to retire and the CBA small business study showed the awful cash flow pressure small business owners are under, you’d be forgiven the idea of being your own boss is not all it’s cracked up to be.
That still might be the case, but at the latest Westpac Melbourne Institute SME Index offers some good news that whatever the headwinds, the outlook for small business has brightened.
The WMI SME index has leapt a stunning 15.2% in the latest quarter from 83.0 to 95.6 in the second quarter. The survey also saw a big jump in the future conditions index which saw an 18.7% improvement.
In a note accompanying the release of the index, Westpac said this optimism for improved business conditions “was reflected by positive changes in employment (a net balance of 6.1 percent of SMEs have hired more staff in the last 12 months) and in investment (a net balance of 14.4 percent of SMEs have increased investment in the last 12 months)”.
Interestingly, while Australia’s SMEs are positive about the outlook, they are more circumspect about the current trading environment, with the current conditions index printing just 78.2.
Westpac said that was because of “weak activity and declining profits”. But the bank also highlighted that this was still 10.4% higher than the second quarter 2016 survey.
Taken at face value, the survey suggests that Australian small businesses are fairly optimistic about the coming Christmas period.
Westpac’s general manager of SME Business Bank, Julie Rynski, said: “It’s pleasing to see a strong uplift in business optimism. These results are a solid recovery from a weaker level last quarter with a promising view for the lead in to Christmas.”
And, as Westpac senior economist Matthew Hassan pointed out, “the most promising aspect of the survey is the solid rise in employment reported over the last year. It suggests the positive forward view is not just a hope but something small businesses are actively planning for.”
The question of course is whether Australian households and business will deliver on small business expectations.
Regardless, this is a piece of welcome news for the sector, and because it employs so many Australians, the economy.