Confidence drops among Aussie small firms: report

The figures showed smaller firms were outperforming larger ones in a number of industries. Photo / Thinkstock

Business confidence among small and medium-sized Australian firms is waning despite business conditions rising to a four-year high.

Small and medium-sized enterprise (SME) confidence fell for the first time in more than a year in the March quarter, according to National Australia Bank's quarterly survey.

Although confidence remained positive overall, optimism was down across all states, the report said.

"This reflects an unwinding of some of the exuberance that firms exhibited in response to the federal election, a depreciation of the Australian dollar and very low interest rates," it said. "Property, construction and business/financial services firms remain among the most optimistic, reflecting the good performance of property markets in 2013."

Despite the fall in confidence, actual business conditions improved, lifting to their highest level since mid-2010, the report said.

Employment conditions picked up slightly but remained weak.

The figures showed smaller firms were outperforming larger ones in a number of industries.

"The largest disparities are occurring in business/property services and construction, where smaller firms are performing much better," NAB economists said. "The only industry where larger firms are reporting noticeably better conditions than their smaller counterparts is in recreation and personal services, although conditions are still positive in this industry for smaller firms."

The report said constraints on SMEs and their ability to make long-term decisions were easing with the change of Government possibly helping to alleviate business concerns about tax and government policies.

"The proportion of firms concerned about the impact of changes to tax policy is elevated, but still down on recent years, consistent with the incoming Government's pledge to scrap the carbon and mining taxes, suggesting limited concern over the upcoming 'tough' Budget," the report said.

- AAP