Australian small business continues to face difficult trading conditions

Australian small business continued to face difficult trading conditions in March, while most indicators improved somewhat in the quarter, the latest edition of the Australian Chamber of Commerce and Industry (ACCI) Small Business Survey showed Monday. According to this survey, key indicators such as sales, profits, employment and investment all remained deep in negative territory in the opening months of 2014. "The small business sector is mildly optimistic that general business conditions will improve in the quarter ahead but given the persistence of poor trading conditions it will remain difficult for business to back this confidence about the future with new capital expenditure and hiring,"the ACCI said in a statement Monday. The ACCI indicated that business taxes and government charges were again ranked as the number one constraint on small business investment in the March quarter,"a position it has held unbroken for more than three years". And according to this survey, other constraints on small business investment revealed that access to both equity and debt finance, current levels of debt and financing costs have become more important in the March quarter. "This is particularly concerning as it signals small businesses are becoming more constrained by factors related to cash flow and suggests a diminished capacity to expand activity even if conditions improve,"the survey analyzed. In addition, the survey showed that persistently negative readings on profitability and sales revenue combined with elevated levels of wage and non-wage labor costs are leading to reductions in employee numbers and slumping investment. The figures of this survey said that the small business employment index along with the current investment indices all deteriorated from already low levels. The current downturn in plant and equipment investment is by far the longest on record since the survey began nearly 18 years ago in the December quarter of 1996.