By Jill Fraser for Lending Central

For the first time since the start of the Global Financial Crisis (GFC) small to medium businesses are starting to show signs of healthy improvement.

This week’s release of the NAB SME Quarterly Survey (September 2009) reveals that business conditions for SMEs (small to medium enterprises) have improved significantly, reaching positive territory for the first time since the GFC began in September 2008.

For the September quarter, large SMEs with an annual turnover between $5m - $10m recorded the strongest improvement and were the best performing at 6 index points, up from -13. Small
SMEs ($2 - $3M) recorded an improvement from -7 to 4 index points, with mid-sized SMEs ($3 - $5M) increasing from -6 to 3 index points.

The main driver of sales this quarter has been a sharp improvement in customer confidence/demand, and it represents the first positive outcome since September 2008. Positive impacts from seasonal and competitive factors have also helped.
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It would appear consumers are already getting twitchy about rising interest rates, despite government assurances that households would understand why they can’t stay low forever.

Or perhaps they do understand; they’re just not overjoyed about it.

Consumer sentiment for November fell 2.5 per cent in the latest reading released this week, following up this month’s second interest rate rise by the Reserve Bank of Australia (RBA).

The Westpac-Melbourne Institute consumer sentiment index had risen in the five previous months and, at 118.3 points, the index is still 38.3 per cent higher than a year earlier.

Together, the October and November sentiment readings - coinciding with the RBA’s latest policy changes - have seen the index fall 0.8 per cent.
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Australian private companies are weathering the economic downturn remarkably well but many have laid off staff and instigated wage freezes to help stay afloat, a survey has found.

Mid-sized Australian businesses say they are not financially overstretched, have adequate access to credit but believe their greatest risk is a fall in consumer confidence, and a skills shortage in the future, KPMG’s annual Private Companies Survey, released on Monday, shows.

KPMG middle market advisory practice partner Don Abell said the results challenged a common perception that the global credit squeeze was strangling Australian businesses.

“This time last year nearly everyone believed it was all doom and gloom ahead,” Mr Abell said in a statement.
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Businesses believe the worst of the economic crisis may be over, but trading conditions remain far from rosy.

A business survey has revealed the biggest quarterly increase in confidence in 34 years but activity at around its lowest since the 1990/91 recession, despite a modest improvement in the June quarter.

The Australian Chamber of Commerce and Industry-Westpac (ACCI-Westpac) survey of industrial trends, released on Thursday, showed business confidence at its highest level since late 2007, although pessimism still outweighed optimism.

The report said the jump in confidence coincided with the much touted “green shoots” of a global recovery, the federal government’s stimulus measures, improved housing indicators and an easing in credit conditions. The Australian economy was also relatively resilient, it said.
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Borrowers have been offered the tantalising possibility of another interest rate cut.

The Reserve Bank of Australia (RBA) left the official target for its benchmark interest rate on hold at a 49-year low of 3.00 per cent after its monthly board meeting on Tuesday.

But in announcing its decision, the central bank conspicuously left the way open for another rate cut if things turn out worse than expected.

“In assessing whether further reductions in the cash rate are required over the period ahead, the board will monitor how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity,” the RBA said.
At neither of its two previous meetings was there any explicit reference to further rate cuts, even as a possibility.
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Victoria’s economy is clearly under stress, but the state treasury is still forecasting a $100 million end-of-year budget surplus.

The 2008/09 mid-year financial report released on Thursday showed a $46 million surplus for the half year to December.

While a surplus of any kind is welcome under current global economic conditions, the latest figure - an expected end-of-year surplus of at least $100 million - is well down on the state government’s initial estimate of an $800 million full-year surplus made last May.
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With luck, the minutes of the Reserve Bank of Australia’s (RBA) latest board meeting will clarify the outlook for interest rates.

The minutes of the meeting held on February 3 will be released on Tuesday at 1130 AEDT.

The announcement right after the meeting locked in a well-anticipated cut in the cash rate to a 45-year low of 3.25 per cent.

But it had nothing to say, not directly anyway, on the prospects for further cuts.
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With most of the industry slowly getting back to work after the holiday season, ready to kick start a new year, we find ourselves asking whether “it” will end in 2009?  Of course, by “it”, I’m referring to the current global economic turmoil that we find ourselves mired in.
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NSW is already in recession, with Victoria and the other states set to follow, a leading economic forecaster has warned.

Access Economic’s Business Outlook for December 2008 - released on Monday - paints a grim picture for the nation’s biggest states and looming slowdowns in Western Australia and Queensland which it says will bear the brunt of a global downturn.

NSW consumers and WA miners were at the heart of the impending recession in Australia, Access said.
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The global economy went on an optimism binge in 2006 and 2007, suffered a breakdown 2008 and will spend 2009 in rehab.

And, as is the case with pop stars and football players, the result of the rehabilitation process can never be predicted with great accuracy.

This is not to say the outlook for 2009 is any more obscure that it was a year ago, for 2008.

But there should be no illusions about the economic uncertainty facing the nation.
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Households are increasingly looking to save any available cash in response to the economic downturn, a survey shows.

The Melbourne Institute survey found the proportion of households saying the main reason for saving was “for a rainy day, such as getting sick or being unemployed”, rose 8.1 percentage points to 48.1 per cent in the December quarter.

The figure was up sharply from 26.2 per cent in December last year.
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The turbulent economy will not stop young Australians travelling in the next year, and travellers of all ages will rely on credit or debit cards to pay for their trips, a survey shows.

An Australia Post survey of over 500 Australians shows 46 per cent of respondents were planning to travel in the next year.
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