Westpac Small Business Index indicates restored confidence for small business sector
27 August 2015
- Westpac-Melbourne Institute Small Business Index rose 20 per cent to 129.9 over the last quarter, the highest level in 18 months
- A net balance of 33.2 per cent of small business owners are expecting an increase in business activity over the next quarter
Small business confidence has reached its highest level since the launch of the Westpac-Melbourne Institute Small Business Index, with the August Index recording an increase of 20.1 per cent to 129.9 points, up from 108.2 points in May demonstrating heightened positivity amongst the sector.
The Index, which measures the confidence, current performance and future plans of the Australian small business sector, has increased 16.6 per cent over the past 12 months, indicating a significant boost in current business activity and expectations of future business performance.
Westpac's General Manager of Small Business, Julie Rynski commented that whilst small business confidence experienced a significant drop prior to the federal budget announcement, it is encouraging to see small business confidence returning this quarter.
"I am delighted to see a significant increase in the Small Business Index this quarter. The lift is attributed to post budget confidence, with over a third (36.3 per cent) of respondents saying that the 'deductibility for assets less than $20,000' will have the biggest impact on their business. Together with a recent lift in consumer confidence and in turn, spending, it is having a positive impact on the sector."
'Customers' have once again been attributed to be the main positive factor affecting business performance (47 per cent), followed by 'staff' (19.2 per cent) and finance (16.2 per cent).
"The customer is at the heart of business, which is reflected in the Index this quarter. It is really encouraging to see small businesses placing an increased importance in customer loyalty and repeat business in response to increased competition in many sectors," added Ms Rynski.
Whilst optimism has increased across the nation, the results by state reveal improvements in the performance and optimism of small businesses in Western Australia (an increase of 36.2 per cent in the Small Business Index for Western Australia over the last quarter), Victoria (an increase of 32.8 per cent), New South Wales (an increase of 14.6 per cent), and Queensland (an increase of 0.3 per cent).
"The Australian economy relies on the success of small business, and at Westpac we are continually recognising the continued importance of small business and looking at ways we can help the sector to grow and prosper," added Ms Rynski.
Westpac-Melbourne Institute Small Business Index
- The Westpac-Melbourne Institute Small Business Index lifted 20.1 per cent to 129.9 over the last quarter to the highest level ever recorded, and rose 16.6 per cent (18.5 points) over the last 12 months.
- A net balance of 33.2 per cent of business owners are expecting an increase in activity/sales over the next three months, an increase of 27 percentage points compared with May results.
- 45.6 per cent of small businesses say they are operating at capacity.
" Six of the eight industry groups have recorded a rise in their Small Business Index compared with May.
- A net balance of 14.1 per cent of small business have plans to hire more staff (a net balance of 4.1 per cent were intending to lay off staff in the May survey).
- The Indexes for 'Financial and Real Estate' and 'Wholesale and Retail Trade' both increased considerably, by 30.2 and 13.5 per cent, respectively.
- The Index for 'Hospitality and Recreational Services' fell by 11.3 per cent, from being one of the highest among industries in May to being the lowest in August.
- Over a third (36.3 per cent) of small businesses said that the 'deductibility for assets less than $20,000' will have the biggest impact on their business.
About the Westpac-Melbourne Institute Small Business Index
The August 2015 Westpac-Melbourne Institute Small Business Index was commissioned by Westpac Banking Corporation (WBC) (ABN 33 007 457 141) and conducted by the Melbourne Institute.
The research aims to provide information about the economic health of Australian small businesses. The report is a quarterly publication based on a representative survey of 300 small businesses from all over the country conducted between 15 July and 23 July 2015. Data from this survey provides measures of performance and the factors that have had the greatest positive/negative effects.