Australia’s small businesses are steadily becoming more confident in the economy and growth prospects despite actual conditions remaining slightly negative.

The November ACCI Small Business Survey showed an improvement in Small Business Conditions over the September quarter, with this index rising 6.7 points to 49.1 – the highest level since the March quarter of 2008. However, the index remains negative and around two points below the five year average of 50.9. Small businesses expect their business conditions to improve further over the December quarter, with the expectations index advancing into expansionary territory for the first time in more than a year.

Small business owners anticipate Australia’s economic growth to rebound over the next twelve months, with the Expected Economic Performance index surging from 41.6 to 55.6 over the September quarter – the highest level since September 1999. And, as a result, sales revenue and profit is likely to grow. However, business investment is likely to continue to be weak over the next three months, with Investment in Plant and Equipment falling back into negative territory after expanding in the last three months.

“While small business experienced some welcome improvements in trading conditions, indicators for sales, profits and employment remained in contractionary territory over the September quarter,” Greg Evans, ACCI Director of Economics & Industry Policy, commented. “Looking ahead, small business expects business conditions to improve further.”

“Without access to equity raisings, investment by small businesses continues to be fragile with the sector reporting insufficient retained earnings, constraining their ability to invest due to difficulties in obtaining external funding. As the engine room for the economy, small business needs to continue to invest and employ to ensure that recovery can achieve self-sustaining momentum when the policy support is phased-out.”