ACCI SMALL BUSINESS SURVEY. Identifying National Trends and Conditions for the Small Business Sector

Transcription

1 ACCI SMALL BUSINESS SURVEY Identifying National Trends and Conditions for the Sector August 2011

2 ACCI Survey I August 2011 ACCI SMALL BUSINESS SURVEY CONTENTS Results at a Glance 2 Summary 3 Conditions 4 Exected Economic Performance 4 Sales Revenue 5 Wage Growth 5 Non-wage Labour Costs 6 Selling Prices 6 Profit Growth 7 Emloyment 7 Overtime Utilisation 8 Investment in Buildings and Structures 8 Investment in Plant and Equiment 9 Constraints on Investment 10 FOREWORD The ACCI Survey is a national survey aggregated from the surveys conducted by member associations of the Australian Chamber of Commerce and Industry. MEDIA ENQUIRIES Greg Evans, Director of Economics and Industry Policy, Australian Chamber of Commerce and Industry. (02) or visit the website htt:// Economic-Surveys/-Business The data in this survey covers the June quarter of There were 2,009 resondents to this survey. 1

3 ACCI Survey I August 2011 RESULTS AT A GLANCE 5 Year Average June 2010 Mar 2011 June 2011 Quarterly Move Se 2011 (e) Conditions Exected Economic Performance (a) Sales Revenue Wage Growth Non-Wage Labour Costs Selling Prices Profit Growth Emloyment Overtime Utilisation Investment in Buildings and Structures Investment in Plant and Equiment (a) Exectation for following twelve-months, (e) exectation for next quarter. ABOUT THE SURVEY Notes: Throughout this survey, index values are in trend terms including five year averages. An index level of indicates that there is an exact balance between those who resonded that the variable is growing and those who relied that the variable had declined. Thus, any level below can generally be interreted as meaning that the variable is falling, and conversely, a reading above indicates the variable is increasing. In this survey, resonses are segmented by size of business, with small firms categorised as having fewer than 20 emloyees, medium having 20 to 99 emloyees and large as having 100 or more emloyees. Technical Note Each survey reading is calculated by taking a weighted sum of the roortion of resonses in each answer grouing to form an index between 100 and 1 (note that answers are groued according to the strength of conditions). The strongest answer grouing is given a weighting of one and the weakest is given a weighting of zero, with those between receiving a roortional weighting. As a result, if all resondents lace their answer in the strongest grouing, the index would be 100. Conversely, if they all oted for the weakest grouing, the index would be 0. If n is the number of resonse categories, ro is the roortion of resonses in a given category (out of 100 and i is the resonse category (ordered from 1 = strongest to n = weakest), then the formula for the index is as follows: Index = n i=1 ( ) n i ro i. n 1 2

4 ACCI Survey I August 2011 SUMMARY FURTHER DETERIORATION IN SMALL BUSINESS CONDITIONS AND CONFIDENCE General small business trading conditions and confidence continued to deteriorate over the quarter amid the areciation of the Australian dollar, the rosect of rising interest rates and taxes, the ongoing global uncertainties and the weakness in consumer sentiment and demand. All the actual and exectation indicators for small business have fallen below their five year averages over the quarter. The survey also highlighted the increasing unevenness in the Australian economic growth since the global financial crisis, with a widening in the divergence of business conditions exerienced by small and larger enterrises. While the indicators for Business Conditions, Exected Economic Performance, Sales Revenue, Emloyment, and Investment in Plant and Equiment were contractionary for small businesses over the quarter, these indicators remained ositive for large businesses. The divergence between small and large businesses erformance is also at a new record high for the indexes of Business Conditions, Exected Economic Performance, Investment in Buildings and Structures and Investment in Plant and Equiment. Conditions (.4) fell from 43.2 to 42.3 over the June quarter, to be 5.5 oints below its five year average of 47.8 and the lowest level since the March 2009 quarter. businesses exect business conditions to imrove to 51.7 over the next three months. Exected Economic Performance (.4) fell to 44.7 from 47.6 over the June quarter, to be 8.4 oints below the level recorded a year earlier. This reading suggests that small businesses have become increasingly essimistic about the rate of Australian economic growth over the next 12 months. Sales Revenue (.5) declined marginally from 44.0 to 43.0 over the last three months, to be seven oints below its five year average of.0. business exects sales revenue to increase to 54.1 over the Setember quarter. Wage Growth (.5) is exected to increase while Non-Wage Labour Costs (.6) is exected to decline over the Setember quarter. Nonetheless, the exectation indexes remain more than eight oints above the mark indicating that labour cost ressure continues to be a concern for small businesses. The index of Selling Prices (.6) fell for the third successive quarter to 44.0, the lowest level since the Survey began in business exects selling rices to increase to 48.5 over the Setember quarter, the first time the exectation index retreated into contractionary territory since June Profit Growth (.7) edged down to 37.5 over the quarter, to be 4.8 oints below its five year average of 42.3 and at its lowest level since Setember business exects the ace of decline in rofits to slow significantly over the next three months, with the exectations index increasing to The Emloyment (.7) and Overtime Utilisation (.8) indexes edged down marginally and remained in contractionary territory over the last three months. business exects emloyment to increase over the Setember quarter, while a further decline is exected for overtime utilisation. Investment in Buildings and Structures (.8) declined over the quarter with small business execting the ace of decline in investment to slow over the next three months. Investment in Plant and Equiment (.9) declined from 47.3 to.6 over the last three months. business exects investment in this area to imrove marginally over the Setember quarter. Business Taxes and Government Charges remained as the Number 1 constraint on small business investment, while Level of Interest Rates and Current Levels of Debt jumed from the 7th to the 2nd osition and from the 12th to the 4th osition resectively. Insufficient demand and Non-Wage Labour Costs were the 3rd and the 5th largest investment constraints resectively. Conditions Seasonally Adjusted Index Trend Index 3

5 ACCI Survey I August 2011 SURVEY DATA Conditions Se 2011 (e) The Conditions index fell from 43.2 to 42.3 over the June quarter, to be 5.5 oints below its five year average of 47.8 and the lowest level since the March 2009 quarter. The index fell further into negative territory indicating that general trading conditions for small business continued to deteriorate over the last three months. business exects conditions to imrove to 51.7 over the Setember quarter. Over the June quarter, Business Conditions index declined for all businesses, with only large business remaining in exansionary territory. The divergence between small and large Business Conditions has widened to new record high level Exected Economic Performance The index of Exected Economic Performance fell from 47.6 to 44.7 over the June quarter, to be 8.4 oints lower than the level recorded a year earlier. The index was below the mark suggesting that small businesses have become increasingly essimistic about the outlook for the Australian economy over the next 12 months. All three size grous exect the rate of economic growth to deteriorate over the next 12 months, with only large businesses remaining otimistic about Australia s economic erformance. The divergence between small and large business exectations is at the highest level since the Survey began in December Mar (a) (a) Exectation for following 12 months. 4

6 ACCI Survey I August 2011 Sales Revenue In the June quarter, the small business Sales Revenue index declined marginally from 44.0 to 43.0, to be seven oints below its five year average of.0. The index is at its lowest level since the March 2009 quarter. While small business exects sales revenue to increase to 54.1 over the next three months, the exectation index has edged down from its March quarter rojections of.0. Over the June quarter, only large businesses exerienced a ositive growth in sales, while small and medium businesses exerienced a contraction Se 2011 (e) Wage Growth The small business Wage Growth index remained relatively unchanged at.4 over the June quarter, to be almost two oints below its five year average of business exects wage growth to rise to 61.3 over the Setember quarter. Medium and large businesses exerienced greater wage ressures than small businesses over the last three months..4.2 Se 2011 (e)

7 ACCI Survey I August 2011 Non-Wage Labour Costs The index of Non-Wage Labour Costs, which measures labour on-costs such as fringe benefits, workers comensation, ayroll tax and training, increased marginally to.9 over the June quarter. Growth in this area is exected to decline to 58.8 over the next three months. Over the June quarter, non-wage labour costs growth was higher for medium and large businesses, with large businesses exeriencing a significant surge in the cost Se 2011 (e) Selling Prices The index of small business Selling Prices fell for the third successive quarter to 44.0, to be 7.7 oints below its five year average of The index is at its lowest level since the survey began in Over the Setember quarter, small business exects selling rices to increase to 48.5, the first time the exectation index has retreated into negative territory since June Businesses of all size categories exerienced negative Selling Prices over the quarter, with large businesses exeriencing the smallest contraction Se 2011 (e)

8 ACCI Survey I August 2011 Profit Growth The index of Profit Growth continued to fall from its recent eak of 42.9 recorded in the December 2009 quarter to 37.5 over the quarter. business exects the ace of decline in rofits to slow significantly over the next three months, with the exectations index falling 0.7 oints from its March quarter redictions of The continued essimism in small business was also reflected in the outcomes for medium and large business, with small firms exeriencing the largest deterioration Se 2011 (e) Emloyment The small business Emloyment index edged down marginally from 47.8 to 47.4 over the June quarter. That this series retreated further into negative territory indicates that small business emloyment remains weak. Over the next quarter, small business exects emloyment to imrove, with the exectation index rising to.1, albeit remaining 2.6 oints below its five year average of Both medium and large firms reorted ositive growth in emloyment over the last three months, with large businesses reorting the largest hiring activity Se 2011 (e)

9 ACCI Survey I August 2011 Overtime Utilisation The index of Overtime Utilisation edged lower from.4 to 44.8 over the June quarter, almost three oints below its five year average of Exectations indicate that the overtime hours worked will decline further over the next quarter, with the exectation index falling to Businesses from all size categories reduced their use of overtime over the quarter, with small businesses reorting the largest cut back in hours Se 2011 (e) Investment in Buildings and Structures Se 2011 (e) The index of Investment in Buildings and Structures declined over the quarter from 41.5 to 39.4, and remains 6.4 oints below its five year average of.8. business investment in this area is exected to imrove marginally to.6 over the next three months. However, the exectations index remains almost ten oints below, indicating that the outlook for investment remains subdued. All businesses exerienced a fall in building and structure investment over the June quarter, with large business reorting the smallest fall in investment. The divergence between large and small business investment in this area is at its highest level in the Survey s 15 year history

10 ACCI Survey I August 2011 Investment in Plant and Equiment The index for small business Investment in Plant and Equiment declined to.6 from 47.3 over the last three months, to be around five oints below its five year average of.8. business exects investment in this area to imrove marginally to 46.5 over the Setember quarter, with the exectation index falling from its March quarter redictions of While small businesses continued to cut back on their investment sending over the June quarter, large and medium firms exerienced ositive investment growth. The divergence between large and small business investment in lant and equiment is at its highest level since the survey began in December Se 2011 (e)

11 ACCI Survey I August 2011 CONSTRAINTS ON INVESTMENT The ACCI Survey of Investor Confidence asks businesses the degree to which twenty factors constrain business investment in lant and equiment. The ACCI Survey breaks these figures down into small vs medium vs large business categories. Based on a new small business breakdown of the most recent July 2011 ACCI Survey of Investor Confidence, the average level of imediments on investment for small business increased from.9 to 41.4 over the June quarter. The average level of imediments is the average of all 20 imediments to investment and reflects whether taken as a whole there is a greater or lesser degree of constraint on investment. The higher the average level of imediments the greater the constraint. To Five Constraints on Investment (Figures in brackets show rankings during the March quarter of 2011.) 1. Business Taxes and Government Charges (1) 2. Level of Interest Rates (7) 3. Insufficient Demand (5) 4. Current levels of debt (12) 5. Non-Wage Labour Costs (10) 1. Business Taxes and Government Charges (1) 2. Wage Costs (3) 3. Non-Wage Labour Costs (4) 4. Insufficient Retained Earnings (5) 5. Availability of Suitably Qualified Emloyees (6) 1. Non-Wage Labour Costs (6) 2. Wage Costs (3) 3. Availability of Suitably Qualified Emloyees (1) 4. Business Taxes and Government Charges (8) 5. Charges by Lending Institutions (16) Business Taxes and Government Charges remained the largest imediment to small and medium business investment over the June quarter, and increased from the eighth to the fourth largest barrier for large businesses. The weak rofitability erformance couled with the rosect of rising interest rates has caused Level of Interest Rates and Current Levels of Debt to jum from the seventh to the second osition and from the twelfth to the fourth osition resectively for small businesses over the quarter. Insufficient demand increased from the fifth to the third largest constraint on small business investment following the continued weakness in consumer sending and market demand. Non-Wage Labour Costs rose from the tenth to fifth largest imediment to small business investment, and increased to the third and the largest constraint for medium and large businesses resectively. 10