Australia’s small business sector seems to have universally missed the business confidence boost we’ve seen recently in the NAB Business Survey.
NAB today released quarterly SME (small business) survey results that showed no uptick in confidence or expectations in the third quarter of 2013.
Chief economist Alan Oster explained that low confidence levels might be due to a big fall in business conditions, which fell four points to -7 during the September quarter.
What’s really concerning is that there is no sign of any pick up in the forward indicators which the NAB says “remain very subdued, implying soft near-term demand”.
Even more worrying for small business – and by extension the millions of people employed in this sector – is NAB’s comment that “cash flow readings among mid to low level SME’s were terrible”.
The survey’s cash flow index fell five points to -8, dragging profitability down five points to -11 and trading conditions six points to -3.
From an economic point of view, this is a window into the multi-speed Australian economy where mining looks to be recovering, big business is hopeful but small business is in the doldrums.
For a real and sustainable improvement in the domestic economy and for an effective rebalancing of the Australian economy as a whole, we need to see small business doing better in the first instance and then well in the long run.
Yesterday’s CPI suggests the RBA won’t be rushing to cut rates again but a high Aussie dollar and a small business sector going backwards suggest that the argument is far from settled.