WA's small businesses upbeat about profitability: survey

Business is good, and is expected to get better, for many of Western Australia's small and medium-sized businesses.

The majority of the State's SMEs reported strong business conditions over the June quarter, according to the National Australia Bank's business and private banking division.

The NAB SME index was 19 points in the June quarter, up slightly on the already strong March quarter outcome.

This was also very strong compared to the 14 index points reported nationally.

The survey, of more than 650 owners and managers of SMEs, indicated a high level of optimism about the WA economy and individual profit outlooks.

NAB state general manager of business banking in WA Andrew Whitechurch said 47 per cent of SMEs in the State expected an improvement in their profitability over the next 12 months.

"Only 14 per cent expect a deterioration over the next year," he said.

SMEs serving the resources, health, construction, financial services and property sectors reported the strongest business conditions for the June quarter, with transport and storage and manufacturing reporting less favourable conditions, due to high oil prices.

Mr Whitechurch noted that SMEs were concerned about consumer demands, labour availability and wage costs, as well as interest rates.

But most were buoyed by productivity and quality improvements, increased customer confidence, positive seasonal factors and the cascade effects of the resources boom, according to Mr Whitechurch.

"NAB business bankers also share a positive view of the financial position of their customers," he said.

"For the June quarter, around half of NAB bankers expected the financial position of their customers to improve in the following three months. This compares to just 17 per cent anticipating a deterioration with the remainder neutral."