Small business confidence on the up

Posted by James Ferre on 19th December 2008

New research released in the December ARA Australian Retailers Index revealed a five percentage point jump in confidence among SME retailers, after consistent falls in confidence levels since November 2007.Australian Retailers Association Executive Director Richard Evans said the December ARA Australian Retailers Index showed marked improvement for SME retailers with increases in key economic indicators, but warned the retailers’ attitudes were still being affected by ‘gloom and doom’ rhetoric.

“As the barometer of the economy operating three to six months ahead of the rest of the supply channel, retailers were the only SME group to report a jump in confidence in the past quarter. Right now other sectors are experiencing what retailers felt earlier in the year. In fact, other sectors will be three to six months behind the strong growth retailers expect in September 2009,” Mr Evans said. “With the number of retailers who reported an increase in sales and profitability rising nine per cent and seven per cent respectively, as well as the highest growth in employment of any other sector, there was a lot of good news for retailers over the past quarter.”

“Despite this good news, the number of retailers expecting to increase sales and profitability in the current quarter has fallen by 20 percentage points and nine percentage points respectively. This indicates the attitude of retailers looking forward has been squashed by negative economic rhetoric, similar to the 65 per cent of consumers who mistakenly believe we are currently in recession,” Mr Evans added.

“Retailers still have significant concerns about consumer demand with a lack of work and sales (26%) and the economic climate (26%) reported as the top problems facing retail SMEs. Not surprisingly, troubles with cash flow (15%) are also a major concern. Cash is king at the moment – and with falling petrol prices and interest rates at their lowest since December 2003 – consumers have plenty of it.”

“The RBA has done its job by lowering interest rates; the Rudd Government has done its job with the $10.4 billion stimulus package and hopefully consumers will start to do their job and inject funds back into the economy. For the first time in a long time, consumers are in control of the economy with power to either continue to reduce demand or to return to growth and positive outcomes,” Mr Evans concluded.