Forests part of confidence slump

THE WA Government’s handling of the forestry debate is one of the factors destroying small business support for its policies, the latest Yellow Pages Small Business Index has found.

Small business support for the Court Government’s policies fell 15 per cent with significantly more proprietors now seeing its policies as working against them rather than for them.

Other areas of concern included the health system, unemployment and education.

Along with the drop in confidence in the WA Government, small business confidence has also slumped.

The survey found only 47 per cent of WA’s small business operators were confident about their prospects for the next year – down 15 per cent since the previous quarter and well below the 54 per cent national average of all small businesses.

For the three months to the end of July, only three per cent of proprietors reported sales growth – down eight per cent on the previous quarter.

The number of small businesses that reported hiring new staff fell to its lowest level since the index began in 1993.

Profitability also fell significantly, recording a 16 per cent drop over the previous quarter. The negative eight per cent result is the lowest since April 1996.

Reflecting the softer sales and profits figures, capital expenditure suffered, recording a 16 per cent slump on the previous quarter.

Despite the doom and gloom in WA, the national small business sector seems set to record its strongest quarterly sales and profit result for five years.

The survey of 1,200 small businesses across Australia found 45 per cent of proprietors expect sales growth in the current quarter. This is up 30 per cent from the May index and the strongest result since the net 51 per cent figure recorded in the August 1994 index.

Index economic adviser John Marsden said the strong growth was continuing and not translating into inflationary pressures.

“Importantly, in this survey, small business proprietors in general report stable or diminished – rather than increasing – price pressures,” Dr Marsden said.

“These results, together with moderate inflation and wage increases, should reduce the pressure the Reserve Bank might feel to increase interest rates and at worst, help maintain a ‘steady as she goes’ interest rate environment,” he said.

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