Small business conditions at record low

Posted by Daniel Palmer on 19th August 2008

The ACCI Small Business Survey highlights that small business conditions have continued to deteriorate over the June 2008 quarter with this index falling to 43.4 – its lowest level since this Survey began in December 1996 and over 10 points below its five year average of 54.8.

In the midst of continued moderation in employment growth, wage growth moderated slightly but non-wage labour costs continued to increase.

The ACCI Small Business Survey also found that:
• Business expects a further decline in Australia’s rate of economic growth over the next twelve months. This index is also at its lowest level since December 1996 and more than 15 points below its five-year average
• The growth of sales revenue has declined further and fell into negative territory over the quarter for the first time in five years. Expectations also moderated from previous figures but remained positive
• Selling prices growth continued to moderate over the quarter
• Profit growth continued its significant decline below the key 50.0 level to 38.8 – nine points below the five-year average and the lowest level since this survey began. Expectations for the September quarter were also negative indicating small business is not confident of a quick recovery
• Growth of investment in plant and equipment has slowed from the previous high levels while the growth rate for investment in buildings and structures remained negative

Mr Greg Evans, Director Industry Policy and Economics, Australian Chamber of Commerce and Industry, believes financial pressure on small business will heighten in coming months. “Over the June quarter, small business experienced a further weakening in business conditions with continued growth in non-wage labour costs. Although expectations suggest growth in non-wage labour costs may moderate slightly in next quarter, pressure on small business profitability will continue,” he advised. “Given the current global financial turmoil, it was not surprising that interest rates as well as the availability of credit were ranked as impediments for small business investment. The RBA should move to cut official interest rates next month and later this year to arrest this slide in small business activity.”

For more information please go to: