A business lobby group says that the confidence in small businesses has remained weak. This is primarily because of the high Australian dollar and the likelihood that interest rates will be raised.

The index for business conditions was 43.8 points in the March, quarter which is only higher by 0.1 compared to the previous period. This was revealed in the small business survey by the Australian Chamber of Commerce and Industry or ACCI. Figures below 50 indicate a contraction in the economic conditions of small businesses.

They had expected a better performance of 49.3 index points.

"Over the March quarter, most small business growth indicators and confidence have continued their declining trend amid the strong Australian dollar, the prospect of rising interest rates and taxes and continued global uncertainties," said Greg Evans in a statement on Tuesday. Evans is the ACCI Director of Economics and Industry Policy.

Furthermore, he said "The survey also highlights that small business performance continued to fall significantly behind its larger counterparts."

Only wage growth and non-wage labour costs rated above 50 points, while 6 of ten components in the survey fell during the quarter.

According to Mr. Evans, the federal budget did not alleviate the costs of doing business in the near term and that disappointed the sector.

"Instead, some measures in the budget will negatively affect their sales and increase taxes payable in certain circumstances. The possibility of further increases in interest rates over the next few months, impending higher energy costs and the possibility of across-the-board minimum wage increases will further impact on small business profitability and viability," he said.

Most indicators of the survey indicate that conditions will be better in the June quarter.



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