Business conditions for small and medium-sized enterprises also fall
Small and medium-sized enterprises (SMEs) continued to experience low business confidence, falling three points to negative eight index points, amid a slowing economic growth.
According to the NAB Quarterly SME Survey for Q4 2023, confidence levels fell across SMEs of all sizes and were negative in every industry surveyed, highlighting widespread concerns about the economic outlook.
Business conditions for SMEs slightly declined but, at +5 index points, remained close to the long-run average, mirroring conditions reported by larger firms in the Quarterly Business Survey.
The NAB survey also indicated a decrease in SME forward orders and a slight reduction in capacity utilization, underscoring a softening trend across various activity indicators. Although labour cost growth decreased to 1.3% in the quarter, labour availability remained a significant challenge for 36% of SMEs.
Purchase cost growth stayed high at 1.6%, while output price growth decreased to 0.9%, reflecting a gradual decline in line with official inflation data.
Alan Oster (pictured), chief economist at NAB, commented on the findings, highlighting the three-point drop in SME business conditions, now slightly below the long-run average.
“Conditions for SMEs softened in Q4,” Oster said. “With economic growth slowing noticeably through the second half of 2023 as inflation and higher rates weighed on households, conditions for SMEs were negative for a number of sectors including manufacturing, retail and wholesale as well as property.
“Labour cost pressures for SMEs eased somewhat in Q4,” said Mr Oster. “This likely reflects the passing of minimum wage impacts that largely took effect in Q3. More broadly, SMEs reported some slight easing in price growth in the quarter, in line with the easing in official inflation measures.”
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