Quarterly SME Survey – June 2013

SME confidence & conditions improve significantly with activity of smaller firms outperforming larger firms for the first time in almost four years. SME conditions strengthened across most industries.

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SME confidence & conditions improve significantly with activity of smaller firms outperforming larger firms for the first time in almost four years. SME conditions strengthened across most industries – especially in the service based sectors – suggesting lower interest rates and a lower AUD may be helping. Forward indicators still subdued overall, implying limited near-term improvement in demand.

  • SME business confidence improved significantly in the June quarter, edging higher than larger firms (NAB Quarterly Business Survey) and rising a touch above the series average. SMEs optimism may have gained from a lower AUD and easier monetary policy settings. This quarters’ confidence reading represents the first time in three years that SMEs have been more optimistic than their larger counterparts. By industry, confidence lifted significantly in property services and construction, possibly due to improving expectations in response to lower borrowing costs, although confidence was relatively unchanged for finance services. Confidence improved strongly in Queensland, SA and Victoria & is now similar across states
  • SME business conditions also improved markedly in the June quarter, with activity of smaller firms outperforming their larger counterparts but remaining relatively subdued compared to the series average. Smaller firms generally performed better than larger businesses, in particular, those in finance and business services. Business conditions varied significantly across industry groups by a range of 38 points, with manufacturing firms remaining heavily depressed. The large variance between industry groups highlight that the multi-speed economy is persisting for SMEs. Business conditions strengthened across every state, with particularly solid improvements in Queensland and South Australia, but net balances for all states were negative except for Victoria.
  • Improvements in forward orders, employment conditions and investment suggest an improving outlook for SMEs; these indicators have edged higher than levels reported by larger firms.
  • The improvement in business confidence in the June quarter was broadly based across all SME business sizes.
  • Responses to a special question suggest that in the past twelve months, almost two-thirds of SMEs developed or improved their websites to improve competitiveness, while one-third of respondents reduced their prices.

For further analysis download the full report.