Business confidence among small firms plunged to its lowest level since 2009 in the December quarter, according to ANZ’s quarterly Business Micro Scope survey.
A net 29 per cent of small businesses were more pessimistic about general business conditions for the year ahead (a net 14 per cent were previously optimistic about the outlook).
The 43 per cent turnaround was the largest fall since 2000 and was reflected in both micro firms (0-5 employees) and intermediate-sized businesses (those that employ 6-20 employees).
“The drop in sentiment came at a time when small businesses were facing change on a range of fronts,” said Andrew Webster, ANZ’s general manager retail and business banking.
“A new Government, a softer housing market, tightening credit, a fall in dairy prices, capacity constraints and a topping out in previous economic drivers such as strong migration have all contributed to a backdrop of uncertainty at the end of 2017.”
The ANZ composite growth measure for small firms – a key proxy for growth based on firms’ own activity outlook, hiring, investment and profit expectations – fell to +10 (from +20). Despite the fall, it remains in growth territory.
“These indicators tie-in with actual GDP growth. So while sentiment may well have soured, small firms are still intending to roll up their sleeves and get on with it,” Mr Webster said.
Regulation regained the top spot as the biggest problem small firms faced. Only a net 1 per cent of firms plan to hire in 2018, possibly reflecting proposed new employment policies aimed at boosting workers’ fortunes.