SMEs are trailing the wider economy

Small business growth continued to trail the wider economy in the last quarter, a National Bank survey has found.

The bank's Small Business Monitor, out yesterday, estimated the annual average growth rate for small businesses was 2.9 per cent to June - slightly below the nationwide rate of 3.1 per cent.

Small to medium-sized enterprises (SMEs) again cited difficulty finding skilled staff as their biggest concern - as it has been for seven quarters in a row. This was followed by the tax burden and then regulation.

New Zealand's economic expansion was now into its seventh year - the second longest run post-WWII.

Such a prolonged period of growth had created fertile conditions to nurture new businesses, and the number of SMEs had risen 10.2 per cent in the year to February 2004, the most recent data showed.

But the survey showed smaller-sized firms in the wholesale trade and manufacturing sectors were finding the going tough as their sectors were also underperforming the economy as a whole. The most prominent decline had been in construction. With residential building consents only 0.2 per cent higher than a year ago, SMEs in that industry were feeling the scale-backs.