Australian small businesses face tough conditions and finished 2012 on a pessimistic note despite a series of interest rate cuts.
National Australia Bank (NAB) said on Monday the decline in confidence and conditions occurred across small and medium business in all categories, though conditions were weakest in businesses with an annual turnover between $2 million and $3 million.
"The deterioration was broadly based across all SMEs, though smaller firms continued to underperform their larger counterparts," it said.
"The deterioration in activity reflected declines in profitability and employment, while trading conditions were unchanged."
Confidence also fell two points to an index level of minus seven, indicating pessimists outnumbered optimists among respondents.
NAB said the survey results showed the Reserve Bank of Australia's (RBA) decision to cut the cash rate in October and December had not been enough to boost confidence among small and medium-sized businesses.
The RBA cut the cash rate a quarter of a percentage point in both October and December, bringing it to its current level of 3.0 per cent.
The NAB survey echoed similar results from the Australian Chamber of Commerce and Industry's small business conditions index, also released on Monday, that showed a further decline in activity in the December quarter.
The index fell to 40.5 points in the December quarter from 40.7 in the previous three months, remaining well below the 50 mark that separates contraction from expansion.
ACCI chief economist Greg Evans said profitability was testing levels last seen during the 2008-2009 global financial crisis and selling prices were at historic lows.
"The sector was under significant pressure over that period and it is certainly continuing to endure very difficult trading conditions," he told reporters in Canberra.