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  • The most recent NAB Quarterly Small and Medium Enterprises Survey released 25 July 2019,

  • shows that business conditions are getting worse in Australia for smaller firms, especially

  • tradies.

  • Although business confidence is up (it rose by 3 index points), actual business conditions

  • have dropped to -4, continuing the downward trend over the past year.

  • At these levels, conditions are both below average and negative, suggesting that conditions

  • for smaller firms are now going backwards.

  • In this chart, we can see the current state of the three different sub-components of business conditions

  • Trading is down; Profitability is down; and Employment is down.

  • Employment and Profitability have both fallen to -6.

  • This chart shows us that business conditions have fallen for all firm sizes.

  • Larger businesses have fallen to 2; Medium to -7; with Small businesses being hardest

  • hit falling to an index score of -8.

  • Although confidence is up in every state of Australia, business conditions have fallen

  • everywhere with Victoria having the most favourable conditions.

  • WA is the worst hit, followed by NSW.

  • Although Victoria has the most positive conditions, taking a look at this chart, it's nothing

  • to write home about.

  • Victorian business conditions have fallen dramatically over the last year from a peak

  • of about 26 in 2018 to 3 now.

  • Looking at business conditions by industry, we can see that Property and Retail are the

  • hardest hit sectors, both falling into severe negative territory.

  • Wholesale comes next, followed by Accommodation, Cafes, and Restaurants.

  • Regarding property, this chart says it all.

  • Property is down, down, down.

  • NAB Group Chief Economist Alan Oster described the results assobering”.

  • He said,

  • The things that worry us are, one, business conditions have come down a lot, and two,

  • it is particularly the small end of town that has come down a lotand that makes us nervous.

  • It's the tradies, and they tend to lead the economyand that's not a good sign.”

  • Sydney electrician Ray Sherriff, spoke to the ABC about business conditions in the building sector earlier this year.

  • He said,

  • Two years ago we literally didn't have time to price all the residential jobs that were coming in.

  • Now it's rare and there are lots of jobs getting postponed and put back.

  • Maybe three to four years ago we were looking at probably 50 to 60% of our business.

  • Now we're probably looking at 20 to 30%.”

  • And most recently he said,

  • Multi-unit domestic has really dried up.

  • The builders that are doing reasonable stuff has not dried up, but the run-of-the-mill has crashed.”

  • The thing that I find most interesting, is that business confidence is up.

  • Have people lost their minds?

  • NAB's Alan Oster commented,

  • We don't think this higher confidence will persist with conditions so low and forward

  • indicators pulling back further.

  • Sales and trading continue to be the largest constraints on firm outputthat is, demand

  • for their products is weakand this is reflected in pressure on margins, with costs

  • growth continuing to outpace the growth of final product prices.

  • The employment index fell sharply and is quite negative.

  • This suggests that sluggish demand that has been evident for some time is now feeding

  • through to hiring decisions.”

  • Small business in Australia is clearly strugglingespecially in the property and retail sectors.

  • Trading is down.

  • Profitability is down.

  • Employment is down.

  • Bloody everything is down.

The most recent NAB Quarterly Small and Medium Enterprises Survey released 25 July 2019,

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Small Business Is Suffering in Australia

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    Felicia Wu posted on 2019/10/07
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