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ANZ Business Micro Scope - September 2017 print Print

Business confidence amongst small firms eased in September.

Small firms' growth expectations remain high

Business confidence amongst small firms eased in September but remains respectable, according to ANZ’s quarterly Business Micro Scope survey.
A net 14% of small businesses – down from 17% in the June quarter – say they are confident about general business conditions for the year ahead. Within this group, micro firms (0-5 employees) slipped by 4 points and intermediate-sized businesses dropped by 2 points.

The ANZ composite measure – a key proxy for growth based on firms’ own activity outlook,hiring, investment and profit expectations – eased slightly to +20, but that’s still elevated. The composite measure for the agricultural sector lifted to historic highs.

Agriculture based small businesses are more upbeat, consistent with firmer commodity prices. Business activity expectations for agriculture-focused small firms topped the other sectors for the first time in over six years at a net 42%, while their profit expectations surged to a four-year high of +28%.

“As we approach the fourth quarter, small businesses retained a positive and stable outlook. The agricultural sector is upbeat on activity and profit expectations. This is likely to have been fuelled by firming prices across a range of agricultural export products,” said Antonia Watson, ANZ’s Managing Director Retail and Business Banking.

On the flip side, small firms in the construction sector are facing headwinds, with the business composite growth measure falling from +27 to +16. Activity, employment, investment and profit expectations all fell though they remain positive.

“The construction sector has been one of the main economic drivers in recent years, but is now facing significant cost increases and credit constraints, with an ongoing shortage of skilled workers adding more tension to the situation,” Antonia said.
Growth prospects remained steady across most regions. However, the composite growth measure for Auckland fell. One key reason is likely to be cooling house prices in Auckland.

Read the full report (PDF, 160KB) 

Highlights from the September 2017 ANZ Business Micro Scope survey of small firms:

[Net percentages reflect the balance of sentiment, i.e. percent positive minus percent negative responses]

  • Headline small business confidence eased to a net 14%.
  • Our composite growth measure for small firms eased to +20 but remains elevated in level terms.
  • Growth prospects for intermediate-sized businesses pushed on towards record highs at +30.
  • Improved dairy prices lifted activity and profit expectations in the agriculture sector.
  • The composite measure for the construction sector fell from +27 to +16, as activity, employment, investment and profit expectations all fell during the quarter.
  • A lack of skilled employees remained the major concern for small businesses; the construction sector is feeling the heat more than other sectors.
  • Growth indicators in Wellington remained high, but Auckland measures fell with expectations likely being influenced by cooling house prices.

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