Small business conditions rise to pre-GFC levels

CONDITIONS for small business have risen to levels not seen since before the onset of the GFC.

CONDITIONS for small business have risen to levels not seen since before the onset of the global financial crisis, new figures show.

Businesses also expect conditions to continue to improve over the March quarter, according to the latest Australian Chamber of Commerce and Industry small business survey.

The February survey shows the small business conditions index rose to 54.0 points in the December quarter, its highest level since the end of 2007, while the expectations index hit its highest level since the survey began in December 1996.

The chamber's director of economics and industry policy, Greg Evans, said the data indicated the outlook for small business was quite strong. The survey also showed small business expected Australia's economic growth to rebound strongly over the next 12 months.

However, despite the improved outlook, Mr Evans said conditions were still difficult for small business, with investment expected to remain weak during the next three months.

Investment in plant and equipment was expected to fall back into negative territory over the next three months after an expansion in the December quarter.

"In comparison with larger businesses, actual trading conditions for small businesses remain more challenging," Mr Evans said.

"Small business selling prices remained contradictory, which continued to put downward pressure on business profitability and the level of retained earnings."

Mr Evans said data showed the economic recovery in Australia since the onset of the financial crisis had been uneven and there was a case for the federal government stimulus to be kept in place.

"We believe the current settings in terms of the stimulus package are appropriate, and we do note that in fact as the stimulus is designed, there is a natural wind-down in terms of those payments," he said.

The opposition has been calling on the government to cut stimulus spending, arguing the economic downturn was not as bad as forecast.

AAP