Optimistic Future For Australia's SMEs

Published : 24 October 2016

No-one is denying that owning and running a small business is easy, but it certainly tends to deliver greater flexibility and more control over your financial future. And now there's even more good news for the future.

The latest Westpac Melbourne Institute SME Index shows that the outlook for small business has brightened, leaping a stunning 15.2% in the latest quarter from 83.0 to 95.6 in the second quarter. The survey also saw a big jump in the future conditions index, which saw an 18.7% improvement.

Westpac said this optimism for improved business conditions was reflected by positive changes in employment - a net balance of 6.1% of SMEs have hired more staff in the last 12 months - and in investment - a net balance of 14.4% of SMEs have increased investment in the last 12 months.

Interestingly, while Australia’s SMEs are positive about the outlook, they are more circumspect about the current trading environment, with the current conditions index printing just 78.2.

Westpac said that was because of “weak activity and declining profits”, but highlighted the fact that this was still 10.4% higher than the second quarter 2016 survey.

Overall, the survey suggests that Australian small businesses are fairly optimistic about the coming Christmas period.

Westpac’s general manager of SME Business Bank, Julie Rynski, said: “It’s pleasing to see a strong uplift in business optimism. These results are a solid recovery from a weaker level last quarter with a promising view for the lead in to Christmas.”

Westpac senior economist, Matthew Hassan, added: “The most promising aspect of the survey is the solid rise in employment reported over the last year. It suggests the positive forward view is not just a hope but something small businesses are actively planning for.”