Subdued business conditions of SMEs have weakened in the June quarter triggering a drop in confidence, according to National Australia Bank quarterly SME survey.

“The high Australian dollar, continued cautiousness of households and concerns about the global outlook are likely to have contributed to the decline in sentiment in the quarter. The fall in confidence was broad-based across low to high tier SMEs, and was more pronounced for SMEs than it was for larger businesses,” the survey said.

The most significant falls in business confidence were reported in property, construction, finance and retail, while confidence in health and business services improved.

The retail sentiment is now the weakest of all industries where it now sits at -13 points, while confidence is strongest in business services with +11 points. The most notable deterioration in confidence was in property services (down 23 points to -5 points), followed by construction and finance, both down 18 points.

But the weak confidence level fell to uniformly weak levels across all firm sizes. Conditions were also relatively subdued across SMEs; conditions improved for low-tier (turnover of $2-3m p.a.) and high-tier ($5-10m p.a.) firms reflecting improvements in profitability and employment, while conditions of mid-tier firms ($3-5 m p.a.) softened.