ACCI Small Business Survey - February 2012

Small Business Trading Conditions Supressed but Stabilising

General business conditions in the small business sector deteriorated according to the February 2012 ACCI Small Business Survey but appear to be stabilising after having gone backwards now for eight consecutive quarters. Individual indicator readings were mixed in the quarter, only rising or falling by small increments. Nevertheless, trading conditions remain deeply suppressed in the face of uncertainty arising from the European sovereign debt crisis and torpid domestic demand.

The Survey also found that:

  • The small business sector is continuing to lose confidence in the economy, the index on Expected Economic
  • Performance over next twelve months posted its eighth successive decline to read just 39.7, its lowest level since March 2009. All business sizes have pessimistic expectations for the economy in the coming year;
  • Profit Growth remains deep in contraction territory with the index on profits at 38.7, co-inciding with declining Investment in Buildings and Structures and Investment in Plant and Equipment and a downturn in Employment and Overtime Utilisation;
  • Despite poor trading conditions the small business sector continues to record significant cost pressures in relation to labour with indices on Wage Growth and Non-Wage Labour Costs remaining elevated well above the neutral 50 level; and
  • Import Competition is now the number one constraint on investment for large businesses in the wake of the stronger Australian dollar and Insufficient Demand ranks as a top five constraint on investment for firms of all sizes as a result of subdued demand conditions in the economy.

Mr Greg Evans, Director of Economics and Industry Policy, Australian Chamber of Commerce and Industry, commented:

"Small business operators continue to report extremely difficult trading conditions and they remain pessimistic about a marked improvement in circumstances in the period ahead. The current economic backdrop is sapping confidence including European instability, uncertainty about the direction of interest rates, the upcoming carbon tax impost and weak demand conditions across many of the sectors where small business predominates.

The survey nominated business taxes, government charges, insufficient demand and the impact of regulations as the largest impediments to investment. While a quick turnaround in demand conditions is not likely the focus needs to be on reducing costs faced by business, this means reducing taxes and winding back the regulatory burden sponsored by government at all levels."

The survey assessed business conditions and business confidence amongst 1,744 small businesses around the country over the July, August and September period. A full copy of the Survey is available on the ACCI website at http://www.acci.asn.au.

For further information:

ACCI's Director of Economics and Industry: Greg Evans 0407 204 559
ACCI's Director of Communications: David Turnbull 0419 272 802
 

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