KEY POINTS:
Australian business confidence has improved thanks to stronger consumer demand and falling petrol prices, although the drought remains a key concern, a survey shows.
The November Sensis Business Index, released yesterday, showed an increase in confidence and perceptions about the economy and future eco-nomic direction among small businesses.
Report author Christena Singh said the results were "quite a significant turnaround" with consistency across the country.
New South Wales and even Victoria had been lagging behind in confidence and this survey showed, for the first time, a real improvement in the small business sector.
"When our analysis is broken down it shows that 65 per cent of SMEs [small and medium enterprises] are confident," she said.
"Just 15 per cent are worried and the remainder are neutral.
"It's quite a positive factor; businesses are starting to feel better.
"They are more understanding of the direction of things like interest rates and are factoring them in, while inflation rates, even petrol prices are easing off."
The main area of concern for some businesses was the impact the drought would have on the economy.
Singh said that businesses on the eastern seaboard in New South Wales, Victoria and in Queensland were being affected "particularly badly".
"Almost one in four businesses are telling us they're facing problems due to the drought."
"They're having a fairly tough time and we have to keep an eye on it," she said.
On a national scale the prime problem for businesses was difficulty in finding and keeping staff - at its highest equal in the survey's 13-year history.
"It's an across-the-board issue, but in the Northern Territory around three in 10 businesses are having a problem," Ms Singh said.
"The rest of the country it's more than one in 10."
Perceptions of the current state of the economy had improved strongly during the quarter, as had perceptions about the country's economic direction.
The Sensis report showed that inflationary pressures such as the prices SMEs charge and their wages bills had moderated in the quarter ended last month.
The economy indicator, which measured perceptions of the current state of the economy, rose 17 per cent over the quarter and the long-term indicator rose 14 per cent.
"Another important part of this good news is that businesses have experienced improved trading conditions during the quarter.
"Key sales, profits and employment indicators have all increased," Singh said.
"In fact, our profitability indicator has risen to the highest level in almost two years."
Sensis interviewed 1800 businesses for the November index.
- NZPA
