THE Federal Government’s small business budget came just in time, with small business confidence across Australia hitting an all-time low in April.
The Westpac-Melbourne Institute Small Business Index fell from 124.0 in February to 108.2 in April, a drop of 12.7 per cent or 15.8 points.
The Index measures confidence, current performance and future plans of the Australian small business sector. Despite the significant drop, four of the five components of the Index remained above the 100-neutral mark, suggesting small businesses are still optimistic.
Westpac’s general manager of small business, Julie Rynski said it wasn’t “all doom and gloom” for the small business sector.
“This Index was taken before the Federal Budget announcement, which included a number of tax breaks and allowances for small business, and should result in improved conditions and increased sentiment among Australian small businesses over the next quarter,” she said.
The measures proposed by the budget include a 1.5 per cent tax cut for companies with under $2 million turnover, as well an instant asset write-off for items up to $20,000.
There has also been a small improvement in the Wholesale & Retail Trade sector, seeing the Small Business Index at 103.2, up from 99.3 in February. According to Ms Rynski, this was likely the result of strong growth in retail trade in recent months fuelled by a significant lift in consumer confidence and spending.
Negative factors affecting small businesses were cited as the economy (38.3 per cent) and regulation (35.8 per cent).
“Small businesses are highly exposed to changing macro-economic conditions, which has consistently been the main factor dampening performance,” Ms Rynski said.
“The deteriorating economic outlook, elevated unemployment expectations and complex regulations, have resulted in a challenging operating environment for the sector.”
But small business owners still hold confidence despite the challenges moving forward, she added.
“Small businesses are an integral part of the Australian economy and Westpac is committed to helping them power forward and overcome the challenges they face to ensure sustained prosperity in Australia.”
This article first featured on news.com.au