Confidence among small business operators remains patchy despite improving conditions, according to a private sector survey, which also found that larger stock market-listed companies are starting to feel more upbeat.
National Australia Bank’s quarterly small and medium enterprise (SME) survey, published on Thursday, found that confidence among smaller companies slipped 1 index point, to 4, between the June and September quarter. This is still above the 2-point average since the depths of the global financial crisis, but below peaks seen around the Federal Election in September last year.
NAB found that improved sentiment among those benefiting from the residential property boom was offset by those in other business segments. Sluggish consumer demand was the main culprit.
“SME confidence is gaining more support from enthusiastic property and construction firms,” said NAB.
“How long confidence levels can be sustained will largely hinge on when (and if) strength in property markets translates into improvements elsewhere in the economy and generates sufficient momentum to snap the spending restraint exhibited by consumers to date.”
The story was better from respondents in NAB’s quarterly ASX 300 business survey, which found confidence among large enterprises gaining momentum in September, for an 8-point jump to 11 index points for the third quarter. This was despite unchanged perceptions of business conditions.
NAB said financial and business services, property, retail and mining companies were the most upbeat, although survey respondents mentioned sluggish domestic demand and global growth concerns as important headwinds. The weaker Australian dollar, however, had helped offset negative sentiment among exporters.
“In the global economy, slower growth (particularly in China) appears to be weighing on ASX 300 export sales,” said NAB.
“However, on a brighter note, export orders have improved and could be further supported by recent downward pressure on the Australian dollar.”