Business outlook gloomy

The latest Sensis Business Index (SBI) survey shows a distinct air of despondency in Australian enterprise, with 87% of SMEs perceiving the economy as slowing (35%) or standing still (52%), and only 13% seeing signs of positive growth.

According to the results, the net balance score of -22 is down five points this quarter and is the lowest score in 12 months.

Sensis CEO John Allan said, “More than three times as many businesses think the economy is slowing as those who think it is growing. The projections for the economy in a year’s time have also deteriorated by 13 points, moving from positive to negative territory.”

The SBI, which reflects the views of 1000 small and medium businesses from across Australia, also showed that support for the federal government remains relatively strong at +6, after falling one point on a net basis.

“The government’s rating is currently 14 points better off than it was at this time last year, placing it in a good position with small and medium businesses as we possibly head to an early election.

“The halo effect of the new Prime Minister seen last survey appears to have now evaporated, however. In the December survey, 8% of SMBs spontaneously mentioned the new Prime Minister as having a positive impact on their perceptions, but that figure is now less than 1%.

“Tax incentives are a growing influence on those with a positive assessment, while excessive red tape is the key concern of those who are worried,” said Allan.

Business confidence fell slightly this quarter (+39 to +35), but remains in a healthy position, with 55% of businesses feeling confident as opposed to 20% who are worried. At this time last year, the score was eight points lower (+27).

“Positive wages and prices results helped influence confidence, while on the other hand there were negative ratings for sales, employment and profitability. A lack of work or sales again dominated as the key concerns for SMBs, while half reported barriers to taking on new staff,” said Allan.

At the state level, New South Wales has overtaken Tasmania to be the most confident region in Australia, while South Australia went further backwards and remains in last place.

The sector results were varied, ranging from a 12-point rise in confidence in wholesale trade, to a 20-point fall in the building and construction industry. The transport and storage sector experienced the worst conditions for both sales and wages. This saw the sector fall eight points in terms of confidence to now sit in last place.

The SBI uses a net balance score which is the difference between the percentage of businesses with a positive outlook versus the percentage with a negative outlook.

Small and medium businesses comprise 99% of all businesses operating in Australia.