Business confidence among small firms picked up slightly in the March quarter, but remained low after nose-diving in December, according to ANZ's quarterly Business Micro Scope survey.
A net 20% of small businesses were pessimistic about general business conditions for the year ahead, a slight improvement from a net 29% last quarter. The small improvement in business conditions was evident across both micro firms (0-5 employees) and intermediate-sized businesses (those that employ 6-20 employees).
"Overall, ongoing pessimism among businesses suggests firms may still be feeling concern about some of the potential impacts of new government policy changes," said Antonia Watson, ANZ's Managing Director Retail and Business Banking.
"That said, there are other factors that firms are coming to grips with, including a softer housing market, tightening credit, capacity constraints and a topping out of previous economic drivers such as strong migration."
The ANZ composite growth measure for small firms – a key proxy for GDP growth – was broadly stable, with falls in agriculture and retail offset by a small recovery in construction, services and manufacturing.
Regulation remained the biggest problem facing small firms, followed by finding skilled employees. Regulatory requirements were the greatest concern for the agricultural and retail sectors (second for construction and services). For agriculture, changes to employment laws, foreign investment and environmental regulation were areas of concern.
Hiring intentions rose to a net 6%, after almost scraping zero the last quarter. Profits expectations also rebounded slightly from negative territory, to 0%.