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Small business confidence across NSW has stablised over the beginning of the year, according to a recent survey.
NSW SMEs see slight confidence uptick in February
24 March 2025
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7 minute read
The NSW Small Business Commission’s latest Momentum Survey has highlighted the slight rise in confidence across the state’s small business community.
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Between January 2025 and February 2025, small business confidence rose marginally, having increased by 1 percentage point to 25 per cent.
The online survey was completed between 1 and 28 February and targeted more than 600 small businesses across NSW.
Confidence levels remain subdued despite this improvement based on challenging conditions, rising input costs, compliance burdens, staff shortages, insurance, weaker customer demand, government fees and charges, and policy uncertainty.
The commission found that conditions over the course of February highlighted the most improvement.
“While confidence levels remained relatively stable between January and February, confidence improved throughout February following the Reserve Bank cash rate decision,” the commission said.
“There was a seven percentage point increase in confidence in the week following the cash rate decision when compared to the week prior.”
The survey also found that 84 per cent of businesses said that they were concerned about the cost of business inputs, the momentum index decreased by 5.0 points, and 46 per cent of businesses had plans to expand their team of staff.
However, the commission revealed a respondent said: “The combination of rising interest rates, wage growth and the lack of small business incentives makes it difficult to maintain our current staffing levels. Unfortunately, we may need to consider downsizing our staff.”
Additionally, 33 per cent of businesses said they had plans to grow, alter, or expand operations; only 14 per cent expected profitability to increase and only 19 per cent expected revenue to increase.
“Overall, business conditions improved in February, marked by rising revenue and profitability, along with decreasing concerns about input costs,” the commission said.
In terms of the momentum index, which decreased by 5.0 points, the commission said this was an unexpected development.
The momentum index is a composite measure that tracks key business performance metrics to identify critical turning points in underlying trends.
The 5.0 point drop over February could be due to the index having been more volatile based on seasonal factors, the commission said.
“The deceleration of the momentum index in February was not unexpected, with January boosted by investment and staffing decisions that were deferred over the Christmas and New Year period,” the commission said.
“The decline in the February index was primarily driven by weaker performance in both the business investment and staffing decisions and recent business performance components. However, the expected business performance component of the index made a positive contribution in February.”
The commission said business confidence results for March would be dependent on the federal budget announcement and upcoming election.
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