Australian SMEs doing it tougher than bigger firms as conditions remain below average: NAB

Australia’s small and medium-sized businesses are still doing it tougher than their larger counterparts as conditions remain below the long-run average.

That’s according to National Australia Bank’s latest quarterly SME survey released on Thursday, which revealed that while conditions picked up for the smallest SMEs in the three months to June, they remained negative.

Conditions for mid-tier firms turned negative, and larger SMEs slipped.

“SME business conditions held steady in Q2 but remained below their long-run average, continuing to track below the level of conditions reported by larger businesses,” NAB said.

By industry, conditions declined in accommodation and food, health, business services, as well as construction. Other sectors posted a rise in conditions, most notably in wholesale.

Across the country, conditions fell in WA and NSW with small rises elsewhere.

NAB chief economist Alan Oster said conditions for SMEs remained below average.

“There was some improvement in profitability but a fall in the employment index as well as trading conditions,” he said.

And while SME business confidence improved somewhat in the quarter, it remained in negative territory as forward orders and capital expenditures both fell.

“The persistently low levels of confidence among both SMEs and larger firms in our surveys have reflected that firms have remained concerned about the outlook for the economy for some time,” Mr Oster said.

Labour availability remains a significant constraint for around 30 per cent of firms, similar to the rates reported by larger businesses.