Small business conditions have dropped to their lowest level in 13 years, a new survey shows.
But there were some green shoots in an otherwise bare paddock, the Australian Chamber of Commerce and Industry said about the results from its small business survey for the March quarter.
The survey’s index fell to 33.1 points – its lowest level since December 1996 – almost 20 points below its five year average of 52.2.
While there been a major recovery in equity markets and banking stability internationally, it was still a difficult period for small business, the chamber’s director of industry policy and economics Greg Evans said.
“Overall the survey shows there are a few green shoots,” he told reporters in Canberra, adding the small business landscape was “mostly a bare paddock”.
Specific indicators of small business conditions, including expected economic performance, growth in sales and profitability, investment and employment growth all drifted lower in the March quarter.
Constraints on investment included a major deterioration in demand and the incapacity of retained earnings to encourage further investment and expansion.
The survey of 2,821 respondents also found that business conditions are expected to remain “significantly negative” during the June quarter.
Despite this, business was trying to remain positive about the situation, with expectations in overall business conditions, sales and profitability expected to rise.
“There’s been a slight improvement,” Mr Evans said, cautioning they were expectations only and not actual performance improvements.
Small business expects a continued softening of the labour market and a rise in unemployment.
The impact of monetary policy would continue to be very important for small business, Mr Evans said, adding the Reserve Bank had been “a little cautious” to date.
“So we believe there’s further room for rate reductions, and sooner rather than later.”