Business confidence stabilises despite downturn fears

Business confidence remains at record lows, but the steep falls seen in late 2008 could be behind us.

That’s the message from the latest Sensis Business Index, which shows confidence among SMEs fell just one percentage point in the last three months to 12%, after plunging from 25% to 13% in the three months to 30 November.

The survey of 1800 businesses revealed that 33% are worried about their business prospects while 45% are confident. Not surprisingly, weak consumer demand is the main reason for pessimism.

Report author Christena Singh says there were signs of stabilisation after 12 months of rapidly declining conditions.

“Trading conditions and business confidence remain at record lows for Australia’s small businesses. However, we are seeing the first signs that the economy may have stemmed the massive slide experienced over the last 12 months,” she says.

“During the last three months, we have seen the percentage of businesses affected by the economic downturn remain fairly much constant. Most key performance indicators have either declined marginally or remained unchanged, while business confidence has weakened only slightly.”

The outlook for profitability remains weak, while the employment outlook is mixed. While more small businesses have decreased staff numbers than increased in the last quarter, small businesses said they are anticipating increased hiring and investment in the short term.

Support for the Federal Government has risen following the announcement of two stimulus packages. Overall, 21% of SMEs believe the Government’s policies support while 23% believe they work against.

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