Australian small business conditions continue to worsen: ACCI survey

Trading conditions to remain bleak with uncertain global economy, softening domestic demand and rising input costs

Australian small businesses continue to struggle with revenue and profit growth at historical lows for non-mining sectors, according to a survey by Australian Chamber of Commerce and Industry.

The survey assessed business conditions and business confidence amongst 1,850 small businesses around the country over the April, May and June period.

It revealed that business conditions in the small business sector continue to worsen despite signs of stabilisation in the past two quarters. The trading conditions are expected to remain bleak given the uncertain global economic climate, softening domestic demand and rising input costs.

The index of Expected Economic Performance over the next 12 months twelve months lowered from 41.6 to 41.3 during the June quarter. It was 2.7 points lower through the year.

Profit growth continues to be “deep in contractionary territory” with the index on profits continuing to trend down in the June quarter, said the survey. Selling prices declined to its new historical low of 45.2, 0.8 point below the low reading of 46.0 previously recorded in June 2009, with small businesses expecting selling prices to continue to fall in the September quarter.

Business taxes and government charges made up the top barriers to investment for small businesses for the sixth successive quarter in June.

"It is alarming that important small business growth indicators, including sales revenue, selling prices, profit growth and investment in plant and equipment, are approaching their historical low levels previously recorded during the height of the global financial crisis, “ACCI director of economics and policy, Greg Evans, said.

"Small businesses are concerned that while their selling prices have fallen to record low level, their input costs remained elevated. While growth in labour costs has slowed in recent quarters, these costs remained at high levels and have resulted in a further fall in small business employment.

He warned that small business are likely to face further headwinds in coming months due to he continued economic and political uncertainties in Europe, the slowdown in China and subdued consumer sentiment.