Small businesses more upbeat

MORE small business owners are upbeat about the economic outlook, but they say rising fuel costs are the biggest constraint for doing business.

Software provider MYOB's 2013 business monitor found fuel prices remain the biggest pressure point for small and medium sized enterprises (SMEs), followed by attracting new customers.

But cash flow is becoming less of a problem.

"Interest rates are also less of a concern," MYOB chief executive Tim Reed said.

The Reserve Bank of Australia (RBA) will hold its monthly board meeting today and is widely expected to keep the cash rate at three per cent, its lowest level since the 2008-2009 global financial crisis.

The monitor's study of 1005 business owners an managers found over a quarter (26 per cent) of SMEs were expecting the economy to improve within 12 months, up from 19 per cent in its July 1012 report.

"It indicates hope is springing back for Australia's business coalface," Mr Reed said.

The proportion expecting an economic improvement to take one to two years is now 37 per cent, down from 42 per cent previously, while 22 per cent think it will take more than two years, down from 24 per cent.

Almost a third (30 per cent) of SMEs expect their revenue to rise this year, while 42 per cent are expecting revenue to be stable.

Mr Reed said the combined 72 per cent of SMEs expecting increased or stable revenue was encouraging when compared with only 58 per cent last year.

Looking back over the past year, 40 per cent reported steady revenue, only just above the 39 per cent who saw a decline, while 18 per cent reported increased revenue.

Operators in the manufacturing and wholesale industry were hit hardest, with 52 per cent experiencing a revenue fall, while 29 per cent of finance and insurance businesses recorded a rise.

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Dollar rises on upbeat RBA comments

THE Australian dollar rose half a US cent after the central bank governor delivered a positive assessment of the Australian economy.

Reserve Bank of Australia (RBA) governor Glenn Stevens today told a parliamentary committee recent cuts to interest rates were beginning to have an effect on the economy.

The Australian dollar was trading at 102.40 US cents at 9.30am AEDT, just before the comments were made, and lifted to 102.91 US cents by 9.54am AEDT.

It finished yesterday's local session at 102.35 US cents.

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Dollar higher after upbeat RBA minutes

THE Australian dollar is a quarter of a US cent higher after the central bank released the minutes of its February board meeting.

At 12pm AEDT today, the local unit was trading at 103.25 US cents, up from 102.95 cents yesterday.

The Reserve Bank of Australia (RBA) kept the cash rate at three per cent at its first meeting of the year, after cutting it by a quarter of a percentage point at the previous meeting in December. The RBA minutes indicated the bank would wait to see how recent interest rate cuts flowed through the economy before deciding if it needed to cut the cash rate further in 2013.

Easy Forex currency dealer Tony Darvall said the minutes were generally positive and spoke about the stabilisation of the Chinese economy.

"They talked about stronger domestic demand across Asia. They're pretty strong comments," he said. "Also, that the iron ore price has increased, which is going to help."

"They weren't focusing on the rate cuts or the downside to the economy."

Mr Darvall said the next focus for currency markets would be RBA Governor Glenn Steven's testimony before a parliamentary committee on Friday.

"They will grill him on the high value of the Aussie dollar, that's for sure," he said. "Our central bank is very independent compared to most countries, and the bar for intervention (in currency markets) has been set very high. At 110.00 US cents they weren't intervening or even talking about it."

Mr Darvall said he expected the Australian dollar to trade in a range between 103.10 US cents and 103.40 cents this afternoon.

Meanwhile, the Australian bond market was weaker. At 12pm AEDT today, the March 10-year bond futures contract was trading at 96.445 (implying a yield of 3.555 per cent), down from 96.465 (3.535 per cent) yesterday. The March three-year bond futures contract was at 97.080 (2.920 per cent), down from 97.100 (2.900 per cent).

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