THURSDAY 3 DECEMBER 2009
For immediate release
Boom times back for many small businesses
Australian business confidence has returned to the high levels enjoyed prior to the economic
downturn, according to the Sensis® Business Index released today.
The quarterly survey began in 1993 and provides the latest snapshot of small and medium
enterprise (up to 199 employees) business activity in Australia. It is based on a sample size
of 1,800 from metropolitan and regional areas, interviewed between 30 October and 20
November 2009.
Report author Ms Christena Singh said there had been another quarter of growth in business
confidence, albeit at a slower rate than the previous two quarters.
“Following two very strong quarters of growth, business confidence has risen more
moderately this quarter.
“Overall, this equates to a strong turnaround from the record low level of business
confidence we saw in February this year.
“Business confidence is now at the highest level in Australia since August 2007,” Ms Singh
said.
The building and construction; communication, property and business services; and
transport and storage sectors are particularly bullish about their business prospects over the
next 12 months. However, confidence remains low in the manufacturing sector.
Business confidence has improved in all states and territories, with the exception of the
Australian Capital Territory which recorded a fall and South Australia, where it remains
stable. Across the nation, Northern Territory has the strongest business confidence while
ACT has the lowest.
In line with improved business confidence, perceptions of the current state of the Australian
economy improved and are now at the highest level since November 2007.
“Importantly, both small business sentiment and actual business performance improved this
quarter.
“In the early phase of the economic recovery, we saw business optimism streak ahead, while
trading conditions remained at historically low levels.
“This quarter we have seen business’ perceptions and their actual performance moving
more in sync,” she commented.
Trading conditions have been strongest for the finance and insurance sector, with the
highest sales and profitability results for the second successive quarter. The retail trade
sector has experienced the weakest trading conditions.
Demand for goods and services strengthened further during the quarter, with the sales
indicator hitting its first positive reading since February 2008.
Profitability improved again this quarter to be at the highest level since February 2008. Ms
Singh noted that while the profitability indicator overall was still in negative territory, it was
significantly higher than this time last year.
The finance and insurance sector experienced the strongest profitability, while the weakest
profitability was experienced in the retail trade sector.
“We have seen a strong increase in employment this quarter, with the employment indicator
out of negative territory for the first time since February 2008,” she noted.
After achieving a strong result last quarter, capital expenditure was the only performance
indicator to fall.
However, Ms Singh cautioned that despite the positive results for the quarter, small
businesses did not expect the coming quarter to be as strong.
“Small businesses overall are expecting demand and profits to be down on the previous
quarter, but remain well above the low levels experienced during the economic downturn.”
The accommodation, café and restaurant sector is expecting the weakest conditions, while
retailers are expecting the registers to ring strongly over the key Christmas trading season.
“Over the next 12 months, small businesses are expecting the economy to be slightly
weaker, and to reduce their capital expenditure and workforce size.
“However, they are expecting sales and profitability to improve.”
The Sensis® Business Index shows support for the Federal Government waned during the
quarter. The main reasons businesses do not support the government are perceptions it
does not offer incentives to small business; taxation is too high; that it is only concerned with
big business; and there is too much bureaucracy.
Cash payments, incentives and the stimulus package are the key reasons for government
support.
December 2009 Sensis® Business Index Key Indicators:
The business confidence indicator rose two percentage points to 52 per cent
Over the quarter, 12 per cent of businesses decreased their workforce size, while 12
per cent increased staff numbers, and 76 per cent made no changes
The profitability indicator improved from negative six per cent to negative three per
cent
Support for the Federal Government’s policies fell strongly, with the indicator down
from positive six per cent to negative one per cent
Demand for goods and services grew, with the sales indicator improving from zero to
positive four per cent
Capital expenditure fell, with the indicator down from positive three to negative nine
per cent.
-ENDS-
For interviews with the report author or for further information contact:
De-Arne Carr on 03 9397 5677 or 0419 585 711
For further commentary from report author Christena Singh, visit
Sensis® Business Index is available now by contacting the above or can be downloaded
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