The latest NAB Quarterly SME Survey for Q4 2023 reveals that small and medium-sized enterprises (SMEs) are grappling with persistently low business confidence, indicating widespread concerns amidst a slowing economic growth trajectory.
Key Highlight
SME business confidence dropped three points to negative eight index points, underscoring apprehensions about the economic outlook across all surveyed industries.
Business conditions for SMEs remained close to the long-run average, with a slight decline reported at +5 index points. However, this mirrors conditions observed by larger firms in the Quarterly Business Survey.
The survey noted a decrease in SME forward orders and a slight reduction in capacity utilisation, indicating a softening trend across various activity indicators.
Despite a decrease in labour cost growth to 1.3% in the quarter, labour availability remained a significant challenge for 36% of SMEs.
Purchase cost growth remained high at 1.6%, while output price growth decreased to 0.9%, aligning with official inflation data.
Alan Oster, chief economist at NAB, commented on the findings, emphasising the impact of economic factors on SMEs:
“Conditions for SMEs softened in Q4 as economic growth slowed noticeably. Various sectors, including manufacturing, retail, wholesale, and property, experienced negative conditions. While labour cost pressures eased somewhat, challenges in labour availability persisted. Additionally, SMEs reported a slight easing in price growth, reflecting the overall trend in official inflation measures.”
The report highlights the ongoing challenges facing SMEs amidst economic headwinds, underscoring the need for targeted support and strategies to navigate uncertain market conditions.
