NAB Quarterly SME Survey – September Quarter 2015

In the quarter, SME business conditions stayed unchanged at +4 index points. Within the components of business conditions, trading conditions were particularly strong, which flowed into modestly better profitability conditions. However, employment conditions remained subdued.

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The NAB SME Survey is the leading business survey on small businesses in Australia, complementary to the comprehensive Quarterly NAB Business Survey. It offers a rich repertoire of insights into factors affecting these firms’ conditions by state, industry and size, as well as an assessment on their outlook for investment and output.

Key Points:

  • In the quarter, SME business conditions stayed unchanged at +4 index points. Within the components of business conditions, trading conditions were particularly strong, which flowed into modestly better profitability conditions. However, employment conditions remained subdued.
  • Meanwhile, heightened volatility in international financial markets and renewed investor concerns about Chinese economic slowdown weighed on the confidence of SMEs. SME business confidence sank by 5 points into negative territory to -1 index point. Most industries recorded an improvement in conditions in the quarter, except for property, business services and wholesale firms. Retail (see Industry Focus on page 5) recorded the first positive reading in more than 7 years at +1, while manufacturing also improved notably. Finance firms were clear outperformers in the quarter, while wholesale and construction firms (which includes residential, non-residential and mining-related construction) were the weakest.
  • Conditions across states were mixed in the quarter, with NSW and VIC continuing to claim the top two spots. SA more than reversed its gains in the Q2 to be back in negative territory, while the mining states of QLD and WA continued to be mired in negative territory. Most states’ confidence deteriorated in the quarter, except for QLD which stayed unchanged at +1.
  • Capacity utilisation reached its highest level since Q2 2011. This, combined with a pick-up in forward orders, indicate moderate improvements in business conditions in the near future. However, capex by firms appears to have lost further momentum in the quarter.

For further details, please see the attached document.