NAB: Small Business Confidence Is Weakening

Sahana Kumari Nagaraj Gobbargumpi of India competes in the Women’s High Jump Final during day thirteen of the 2014 Asian Games at Incheon, South Korea. Brendon Thorne/Getty Images

SME business confidence eased slightly in the September quarter, continuing the trend decline from the peaks seen around last year’s Federal election.

The NAB Quarterly Business Survey of small to medium enterprises shows this result is consistent with the ongoing sluggishness of demand in the domestic economy.

The steady improvement in business conditions seen over the same period has prevented a much sharper deterioration in confidence.

SME confidence is gaining most support from enthusiastic property and construction firms.

However, the NAB questions how long this will last.

“How long confidence levels can be sustained will largely hinge on when and if strength in property markets translates into improvements elsewhere in the economy and generates sufficient momentum to snap the spending restraint exhibited by consumers to date.

“This will be a difficult task given elevated unemployment, low wages growth and ongoing concerns held by consumers over the rising cost of living, which is constraining their discretionary spending (NAB Consumer Anxiety survey).”

Finance, retail and health firms are least confident, the first recording a sharp drop in confidence during the quarter.

The quarterly rise in business conditions reflected a solid increase in trading conditions.

In contrast, profitability was unchanged, while employment conditions eased.

Source: NAB

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