Small businesses in Australia face difficult conditions

Australian Chamber of Commerce and Industry (ACCI) said on Monday that small businesses in the country are faced with difficult trading conditions.

ACCI, a leading business group, said the latest edition of its Small Business Survey indicated that difficulties remain for small businesses throughout the December quarter.

After conducting survey amongst 1,289 small businesses around the country over the fourth quarter of 2013, ACCI found that key indicators such as sales, profits, employment and investment were all mired deep in negative territory.

"For many of the indicators, the expectations show that small business expects some bottoming-out or modest improvement, but given the results over the recent past, it may be difficult for business to achieve significant improvements in the short-term," ACCI said in a statement.

ACCI suggested a strong focus on reforms to business taxes and government charges to prompt recovery, since the survey has found that government charges being the top recorded constraint on small business investment in the December quarter for the tenth consecutive quarter.

Given the poor trading environment, insufficient demand and local competition also featured prominently in the constraints to investment over the quarter.

Poor profitability and sales revenue readings have led small business to reduce employee numbers and curtail investment.

Over the fourth quarter, the small business index for employment continued to sink further into negative territory while the figures for investment in plant and equipment continued to be very low. The current slump in plant and equipment investment is by far the longest on record since the survey began 18 years ago in the December quarter of 1996.

Wages appear to be out of step with trading conditions facing small business with the wage index only moderating while sales and profits have plummeted. This is further born-out by the constraints to small business investment which shows that non-wage and wage costs were the third and fifth most binding constraints on investment in the December quarter.

Other labour market indicators were also suggestive of a difficult current trading environment, with overtime utilization recorded by small business remaining low and non-wage costs remaining elevated.