SME conditions worsen

The environment for small and medium businesses (SMEs) continues to worsen, with business conditions in the last quarter dropping to the lowest level on record and confidence in March quarter performance deteriorating even further.

The pessimistic outlook was reflected in the results of a survey of SME conditions conducted by the National Australian Bank. The survey showed 27 per cent of SMEs reported poor or very poor conditions for December, while only 23 per cent of SMEs reported good or very good business conditions, the lowest score since the start of the survey in 2006.

SMEs are also worried about their performance in the next quarter, with small business confidence at minus 22 index points, mid size businesses at minus 27 points, and large SMEs the most pessimistic at minus 28 index points.

According to the survey, the 12-month profit outlook for SMEs has fallen to minus 22 points.

Geoff Greer, the regional general manager of Business Banking Australia, said SMEs across Australia would welcome the Government’s stimulus package. Property services, motor vehicle registration and residential construction were hit hard by the slump in spending, he said.

SMEs in South Australia, Victoria and Western Australia reported modest but positive business conditions. Queensland was the worst performing state in terms of SME performance, followed by New South Wales.

SMEs in accommodation, health, business services and transport performed the best.