National Australia Bank released its Quarterly Small and Medium Enterprise (SME) Survey for the March quarter on Thursday. SMEs’ quarterly business conditions remained mostly stable in 1Q2015 at +2 index points across all tiers. At the sub-component level, SME trading and profitability conditions have deteriorated, but was offset by improved employment conditions overall. Low-tiered firms continued to struggle relative to larger counterparts. Smaller firms with $2-$3m revenue turnover have performed worse consistently across all measures of business conditions and confidence. The only outlier in the performance difference in small, mid and large tier firms was the employment conditions. Mid-tier firms only outperformed larger tier firms in employment conditions.
In separate industries, conditions were mixed. Property services and financial firms continued to perform well. Accommodations, cafes and restaurants reported a significant improvement and are now back in positive territory. Wholesale and transport had the weakest business conditions. Manufacturing improved into neutral territory. SME business confidence remained stable in the first quarter of 2015. Confidence in SMEs was slightly higher than general business confidence measured by the NAB Quarterly Business Survey (QBS). Property and manufacturing confidence increased more than other industries. The rise in confidence was attributed to rising property prices and a stable AUD at a lower level. Transport firms experienced the sharpest decline, falling from 13 index points to -4.
Conditions across states were mostly lower in the first quarter. The exception was Victoria, which enjoyed a large increase in both confidence and conditions. NSW also reported positive confidence and conditions for the quarter, although conditions did deteriorate slightly. Both conditions and confidence have deteriorated in WA and the region is now the weakest out of all states, followed by Queensland. Forward orders fell into negative territory in the quarter, reflecting a consistent fall across differently sized firms. SMEs’ capital utilization mirrored trends in confidence and conditions and stabilized around 79 per cent, but remained slightly below the long-term average of 80 per cent.
Author: Matthew Dibb
Apr 30, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.