SME confidence has leaped 21% in the past quarter, spurred by more optimistic perceptions of the economy.
The Sensis Business Index found in the past three months SME confidence surged from 17% to 38%, the strongest single quarter increase since the index commenced in 1993.
All the states saw an increase in confidence, with Western Australia and Victoria having the largest increases, up 30% and 25% respectively.
Sensis Business Index author Christina Singh said in a statement identical increases were recorded across metropolitan and rural areas.
“This is great news leading into the Christmas retail period,” Singh says.
“The difference between SMEs that believed the economy was growing, and those that believed it was slowing is net positive 11%, a 44% point increase in the past quarter. That is a major turnaround in perceptions. In fact, it is the highest point since November 2010.”
According to Sensis, the majority of businesses felt the economy would improve in the next year.
Singh says positive perceptions are at their highest since May 1996, with a net positive of 39%.
“This was up 22 percentage points from last quarter’s results… Overall, this indicator has risen 52 percentage points since the same time last year, a huge difference,” she says.
When it came to the states and territories, the overall perception was positive, however South Australia recorded a net balance of 0%, while Tasmania was -1%.
Across the industry sectors, confidence has increased to the point where it is significantly higher than concern.
Businesses in the health and community services sector and those in the cultural, recreational and personal category were the most positive, with confidence levels of 72% and 71% respectively.
The most pessimistic businesses were those in manufacturing and transport/storage, with 34% and 25% of businesses, respectively, worried about the economy.
It’s no surprise manufacturing companies were the least confident, as this year the sector has been under pressure, with a number of high-earning companies forced to fold.
In April, a steel manufacturing business turning over more than $40 million was placed in administration due to the uncharacteristically high Australian dollar.
While in June a Perth-based hydraulic manufacturing and services business called Fluid Power Technology collapsed with debts exceeding $6 million.
At the time, administrator Matthew Donnelly from Grant Thornton told SmartCompany the company’s failure was because it grew too fast without sourcing stable work flow or maintaining its cost controls.
“It has a cost structure which is too large compared to the revenue it can generate,” he said.
According to Sensis, the prime concerns for businesses in 2014 are going to be lack of work/sales, the economic climate, competition and finding/keeping staff.
While a lack of work or sales is ranked as the number one concern for the 20th successive quarter, the proportion of SMEs reporting this as a problem fell 11% to 14%.
Reports of challenges caused by a lack of work or sales were highest in the Northern Territory, where 23% of SMEs said this was an issue.
To find out more about the Sensis results and how to look forward to 2014 with confidence, join SmartCompany and Sensis for an intimate breakfast in Melbourne on Thursday. If you’re interested, book tickets here.
