SME confidence rebounds

Confidence levels among Australia’s small-to-medium enterprises (SMEs) bounced back strongly last quarter, according to the latest Sensis Business Index.

Overall confidence levels rose 16 percentage points in the last quarter, following the sharp decline recorded in the May survey.  However, they are still below the post-election peak recorded in November 2013.

The increase in confidence coincides with current perceptions that the state of the economy has improved, rising 14 per cent on the previous survey. Although more respondents believe the economy is slowing rather than growing, there has also been an increase in the proportion of SMEs expecting the economy to be stronger a year from now.

Despite the increased levels of confidence, SMEs recorded only marginally stronger performance results last quarter for key indicators such as profitability and sales. More businesses also reported decreased rather than increased employment levels.

Overall, expectations for short-term (current quarter) growth were considerably stronger than last quarter, particularly on the key sales and profitability dimensions.

“Encouragingly, only a quarter of business owners reported being worried about their prospects. The lack of work or sales was the most pressing problem, with a strong sense people are not spending and increasing concern about competition. The economic climate, bureaucracy and cash flow were among the other challenges we heard,” said John Allen, CEO at the marketing services company Sensis.

A full copy of the report can be found here.