SMEs winning in non-mining recovery

Small businesses are no longer being left out of the non-mining recovery, a NAB survey reveals.

Business conditions for small and medium enterprises climbed to the best showing since 2010. Picture Andrew Tauber.

Small businesses are no longer being left out of the non-mining recovery, a new survey shows, with conditions for the sector seen at their highest level in six years.

The NAB SME Survey found business conditions for small and medium enterprises climbing two points to a reading of +6 in the June quarter, its best showing since 2010 and above the +4 average.

“This survey provides more evidence that the positive effects of the broadening non-mining recovery are spilling over into smaller businesses,” NAB chief economist Alan Oster said.

“While SMEs have continued to lag behind the broader business community, the gap between them has narrowed.

“Also encouraging is that better conditions were recorded by most industries. While tertiary services … have performed well for some time, intermediate services such as wholesale have been playing catch-up in the last two quarters as well.”

The numbers were largely strong across the board as confidence rallied, but the mining-heavy state of Western Australia as well as the construction sector were seen as notable laggards.

Employment growth was also modest, while price pressure was unsurprisingly lacklustre given recent economic data revealing a 17-year low in annual inflation.

“We continue to see NSW and Victoria outperforming other states,” Mr Oster said. “Encouragingly, however, all states were more confident in the quarter, with Victoria being the standout.”

The survey was carried out prior to the potential sentiment-shifting events of the federal election and Brexit vote, although NAB said the resilience of markets in the aftermath and a strong result in the broader business survey pointed to a likely muted impact.