Macroeconomic concerns worry small businesses

June 12th, 2014

Small businesses concerned about the economy

The outlook for many small businesses remains difficult as they struggle to cope with macroeconomic conditions, the Westpac-Melbourne Institute Small Business Index has revealed.

Results show that while the outlook generally remains positive, there are still anxieties surrounding the performance of the Australian economy. A total of 40.1 per cent of respondents said the economy was the biggest factor influencing their performance.

Bill Evans, Westpac global head of economics, said there are still nevertheless plenty of reasons to be optimistic.

"Even though there was little in the budget which would affect small business adversely, the concern will be the impact the budget has on household confidence and subsequently demand," he commented.

Small business cash flow is likely to be affected by a 6.8 per cent decline in the Westpac-Melbourne Institute Index of Consumer Confidence, which could lead many people to cut back on their spending.

Further results from the business survey found small businesses with a turnover in excess of $2 million were more positive about what the future has in store for their operations.

Meanwhile, companies in the wholesale and retail sectors were found to be the most optimistic about their business activity over the coming months.

The index reading increased 3.8 points in the second quarter of the year, with many small businesses generally more confident about the performance of their industries than they were three months previously.

Much of the overall rise in sentiment is the result of a sharp rise in confidence among Queensland businesses, whose reading increased 22.7 points last month.

This helped to offset minor falls in other parts of the country, including New South Wales (-4.1 points), Victoria (-4.1 points) and Western Australia (-6 points).

"Small business is the backbone of our economy, and we must support these businesses to ensure the continued prosperity of our nation," added Julie Rynski, Westpac's general manager of small business.

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