SMEs confident despite global wobbles

The confidence of Australia’s SMEs remains high despite predictions of economic doom stemming from the ongoing crisis on international financial markets, according to the latest Sensis Business Index.

More than 70% of Australian SMEs say they are either extremely confident or fairly confident about their prospects over the next 12 months, compared to just 12% who say they are worried, Sensis’s August survey of 1800 small and medium sized businesses around Australia found.

The number of business owners who are extremely confident about their prospects increased by 2% on the most recent May 2007 survey, while total confidence levels almost 10% higher than in August 2006.

SME owners are less positive about the performance of the Australian economy over the next 12 months than they are about their own business prospects, perhaps reflecting the high level of media coverage give to the US sub-prime woes and consequent stockmarket volatility.

Slightly more SME owners now believe the economy will be in a worse state in 12 months than it is now. This is a turnaround from the most recent May 2007 survey, when 13% more business owners thought economic conditions would be positive than negative a year ahead.

On most business measures, many SMEs are right to be confident, according to the index. Almost 60% of businesses believe sales will increase over the next 12 months, while 19% of businesses experienced sales growth in the May to June quarter of 2007 just gone.

The outlook for profits is also strong, with the number of business expecting profits to grow over the next 12 months lifting 8% to 53%. In the last quarter a net balance of 12% of SMEs recorded increased profits, the highest level since February 2005.


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