SMEs weighed down by Australian dollar, rate hikes, natural disasters: ACCI survey

Large and small businesses are presenting increasingly divergent views on business conditions, expected economic performance and sales revenue, with SMEs weighed down by the strong Australian dollar, looming interest rate hikes and global troubles.

ACCI director of economics and industry policy Greg Evans says natural disasters and the prospect of new taxes are hurting SMEs, which are falling significantly behind their larger counterparts.

The Australian Chamber of Commerce and Industry (ACCI)’s Small Business Survey, released today, shows a decline in general trading conditions and confidence for the March quarter. The survey is an aggregation of surveys conducted by ACCI’s member associations, and had 1,800 respondents from small (fewer than 20 employees), medium (20 to 99) and large businesses.

The business body says for business conditions, expected economic performance and sales revenue, the divergence between small and large businesses has reached a record high.

The survey – which sets 50 as the mark that separates growth from contraction – finds small business conditions edged up to 43.8 in the March quarter, from 43.7 in the December quarter, but well below the all-business average of 49.2.

Profit growth was down to 39.2, well below the five-year average of 42.8, and just below the 39.3 recorded in the previous quarter.

Sales revenue was 44.2, just below the 44.8 result recorded in the previous quarter, and below the five-year average of 50.7.

Expected economic performance edged up to 49.3 in the March quarter, from 49 in the December quarter, taking it above the five-year expected economic performance.

“The continued pessimism in small business was also reflected in the outcomes for medium and large business, with small firms experiencing the largest decline,” the ACCI said.

Wages growth slipped to 59.9, versus 60.4 in the previous quarter, and below the five-year average of 62.2.

“Medium and large businesses experienced greater wage pressures than small businesses over the last three months,” it said.

Non-wage labour cost were steady, but below the average, while selling prices slipped to 47.1, versus 48.3 in the December quarter and 52.3 for the five-year average.

For small business, the top five constraints on business were business taxes and government charges, followed by insufficient retained earnings, followed by wage costs, local competition and insufficient demand.

Medium-sized businesses were also primarily concerned with business taxes and government charges, although for large business, the big constraint was the availability of suitably qualified employees, followed by local competition and wage costs.

Evans also expressed his disappointment at last week’s Federal budget, saying for some small businesses it will negatively affect sales and increase taxes payable.

“The possibility of further increase in interest rates over the next few months, impending higher energy costs and the possibility of across the board minimum wage increases will further impact on small business profitability and viability,” Evans says.