Interest rates are on hold but what are the other key indicators for the year ahead? We break it down.
Conditions were again strong in essential services including health, property, finance, transport and business services.
According to NAB Group Chief Economist Alan Oster, “business conditions for SMEs have now been above or in line with larger businesses for two consecutive quarters, after lagging behind for an extended period. It’s particularly encouraging to see the smallest firm catch up, with the largest improvement in conditions since end-2015 seen by low-tier SMEs with turnover of $2-3 million. Business confidence has also improved strongly across all SME categories.”
“SMEs in the more diversified economies of New South Wale and Victoria were doing better”, said Mr Oster, as strong economic fundamental and population growth support business growth. “It is also encouraging to see business conditions continue to improve in Western Australia, despite remaining negative”. Both WA and Queensland enjoyed a rebound in business confidence, likely on the back of higher commodity prices. The survey did not take into account the impact of Cyclone Debbie, however, which hit Queensland and northern New South Wales in late March. “We do expect some hit to business confidence and conditions in Queensland in coming quarters”, said Mr Oster. “The imminent closure of the Holden car manufacturing plant in Elizabeth north of Adelaide might have also impacted on small business conditions and confidence in South Australia, which were both negative in the quarter.”
Conditions were again strong in essential services including health, property, finance, transport and business services. “A similar trend was observed in the main NAB survey, as the non-mining economy gains traction”, said Mr Oster. “We will continue to monitor the persistently weak conditions in hospitality, retail and manufacturing in the quarters ahead.”
The survey also shows SME firms employed a range of strategies to improve competitiveness, with the use of websites and launching of new products/services the most popular. On the other hand, “we are seeing a declining popularity in advertising through traditional media such as newspapers and radio, as firm are increasingly going online”, said Mr Oster.
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