Small business conditions at record low: ACCI

Posted by Isobel Drake on 18th November 2008

The ACCI Small Business Survey has found that small business conditions have continued to deteriorate over the September quarter with this index falling to 38.6 – its lowest level since the Survey began in December 1996 and over 15 points below its five year average of 54.2.

In the midst of a continued slowdown in employment growth, wage and non-wage labour costs continued to moderate and fell below their five year average.

The ACCI Small Business Survey also discovered that business expects a further weakening in Australia’s rate of economic growth over the next twelve months. The Expected Economic Growth index is also at its lowest level since December 1996 and almost 20 points below its five year average.

Other findings included:

  • Sales revenue has declined further into negative territory over the quarter, but small business expects sales revenue to improve over the next three months;
  • Selling Prices growth continued to moderate over the quarter;
  • Profit Growth continued its significant decline below the key 50.0 level to 36.5 – more than ten points below the five year average and the lowest level since this survey began;
  • Expectations for the December quarter were negative indicating that small business is pessimistic about a quick rebound;
  • Investment in Plant and Equipment contracted for the first time since March 2003, while the growth rate for Investment in Buildings and Structures remained negative.

“Over the September quarter, small business experienced further weakening in business conditions with some indication of rising unemployment. Prospects for small business remain weak amid global recession fears and waning business and consumer confidence,” Mr Greg Evans, Director Industry Policy and Economics, Australian Chamber of Commerce and Industry (ACCI), commented. “Given the current world economic slowdown, easing of cost pressures is needed, as well as added stimulus such as tax cuts to encourage business investment.”

“Interest rates remain an impediment for small business investment, notwithstanding the Reserve Bank’s cash rate reduction of 200 basis points since September,” Mr Evans added. “Major lenders should play their part in stimulating the economy by passing on as much as possible of the official interest rates reductions to small business borrowers.”