Small business in NSW worst affected: survey

SMALL and medium-sized firms in NSW have been suffering the worst business conditions in the country since the global economic crisis tightened its grip.

SMALL and medium-sized firms in NSW have been suffering the worst business conditions in the country since the global economic crisis tightened its grip.

NSW has overtaken Queensland in facing untenable business conditions this quarter, the latest National Australia Bank survey has found. Victoria and Western Australia fared better while South Australia experienced the most favourable business conditions.

For the first time, poor business conditions affected firms turning over $2-10 million a year in every state in the country.

The NAB-SME business conditions index fell another eight points last month on top of last quarter's three-point fall to be at minus 12 index points.

The survey found that 31 per cent of SMEs said conditions had been poor to very poor while only 19 per cent reported good or very good business conditions.

"Our survey shows business conditions have deteriorated and business confidence, while showing some improvement, is still poor," Geoff Greer, executive general manager, NAB business, said.

"It has never been more important for Australians to rally behind their local small businesses.

"With business conditions and confidence being dampened by weakening customer demand, Australians should ... spend (their stimulus) on local and Australian goods and services."

The survey found that only health and business services were performing well under strained conditions.

Despite challenging conditions experienced by most businesses, the NAB survey found some signs of optimism.

But these had not translated into the profit outlook this year, which remained poor.

Most small to medium-sized businesses reported poor profit growth in the March quarter, with NAB's SME profit index down 10 points to minus 15.

The 12-month profit outlook deteriorated further and fell by five index points to minus 27, which continued the sharp decline experienced last quarter.

"Given the results of the survey, it is certainly too early to say whether or not we are at the bottom of the cycle. SMEs are most concerned about consumer demand and it will be interesting to see what effect the federal budget will have on business confidence levels," Mr Greer said.