NAB: Australia's small business sector is lifting

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The release of the NAB’s quarterly SME Business Survey is another indication that the overall malaise that has gripped the business sector in Australia over the past couple of years is lifting.

The NAB said that during the June quarter “SME quarterly business conditions and confidence appeared to have benefited from the tax measures targeted at micro businesses in the Federal Budget, with the conditions and confidence indices rising by 2 points to +4 and +5 index points respectively.”

Like the larger quarterly survey, the SME survey showed trading conditions as strong with a print of 10, up 4 from last quarter.

What’s clear is that there is a divergence between service businesses which are “maintaining momentum ahead of non-service industries”. That’s important because for all the focus on mining and manufacturing as the key areas of interest, Australia is a service-based economy.

Employment continues to disappoint however, with a fall to -1 from 0 last. Interestingly there is a clear divergence between businesses in the $5-10 million turnover which saw the employment index jump from 0 to +5 and smaller companies in the SME sector.

Perhaps more crucially, however, than any one quarter move in confidence or conditions, is that the NAB highlighted that SMEs are feeling the weight lifted off their shoulders when it comes to the long term outlook.

“In the June quarter, all significant constraints affecting SMEs’ long-term decisions showed an amelioration, with global economic uncertainty, tax and government policies and interest rate showing the greatest improvements. Credit and interest rates were also cited as being less restrictive to SMEs’ long-term decisions in the quarter, but they have been relatively contained in the last few years due to accommodative monetary settings,” the bank said.

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