Health has greatest expectations

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Small and medium business confidence across the country has reached a nine-year high, new figures reveal

The December Quarter 2018 Sensis Business Index, which measures the activity, expectations and confidence of small and medium businesses every three months, has found confidence levels rose by eight points to +50.

This is the highest level recorded since December 2009.

At an industry level, hospitality was found to be the most confident sector, with a significant increase of 36 points, taking it to an index of +71.

Health and community services was equal second-highest among sectors, though confidence remained unchanged at +56. This is six points above the national average.

“Confident businesses were those that were already established and solid operators, with specific business strengths and healthy sales also influential,” the report states.

“Declining sales is the dominant issue for the worried SMBs.

“Last quarter, this sector was one of the better performed especially for sales (+14), prices (+18) and profitability (+18). Other key indicator balances were positive too—employment (+3) and wages (+8).

“The capital expenditure balance for the year was just under the national average (-9). For this quarter, all key performance indicator expectations are positive – sales (+15), employment (+19), prices (+9), wages (+8) and profitability (+12).

“Year ahead expectations are highest of all sectors for sales (+41) wages (+36) and capital expenditure (+9). They are positive and around the national average for employment (+16), profitability (+26), and prices (+28).”

Tied with Health was the Communications, Property and Business Services Sector.

Retail, meanwhile, came in last place. Retailer confidence actually increased by 14 points, but this only took it to +26.

“Decreasing sales, cost pressures and an unfavourable business environment are the main concerns expressed. Being an established, solid business is the primary reason for confidence,” the report says.

Metropolitan small and medium businesses were again found to be more confident than their regional counterparts, recording balances of +58 and +38 respectively. Overall, prospects for the year ahead were also strong particularly in sales, with over 40% of SMBs expecting growth in this area to indicate a rewarding 2019 ahead.

Despite a growth in sales predictions, perceptions of the economy continued to fall for the third quarter in succession, with 61% feeling they will see no change in the economy in 12-months’ time.

“It is interesting to highlight that SMBs are more confident in their own sales over the next 12-months than they are in the Australian economy and we hope to see businesses maintain this confidence throughout 2019,” said Sensis CEO John Allan.

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