Sydney small business confidence ticks up as costs ease

Sydney small business confidence rose for the first time in five quarters, according to the September edition of the quarterly confidence index compiled by the Sydney Business Chamber, with 640 businesses across metropolitan Sydney reporting a modest lift in forward-looking sentiment and a sharper easing in the cost of inputs.

The composite index moved up 3 points to 54.2, returning to the neutral range of the survey's 0 to 100 scale after four consecutive quarters below 50. Input cost expectations fell 9 points to their lowest reading since the March 2025 survey, driven by falls in freight, energy hedging costs and packaging.

What businesses reported

Trades and hospitality businesses recorded the largest percentage-point improvements, with the construction and trades sub-index up 6 points to 56.8 and hospitality up 5 points to 52.4. Professional services businesses improved modestly, while retail, still the weakest sub-sector, edged up just 1 point to 48.1.

Respondents cited three changes in the quarter: lower annualised wage pressure as the 2.6 per cent state minimum wage increase flowed through, softer diesel and freight surcharges, and a modest pickup in discretionary spending through the winter school holidays. About 34 per cent of businesses reported they had raised prices in the quarter, down from 47 per cent two quarters ago.

Businesses in the north-west corridor led the improvement, with the Chatswood, Parramatta and Blacktown sub-sample recording a combined 5-point gain. Inner Sydney and the eastern suburbs were flat to slightly down, consistent with the divergence in retail turnover between the two halves of the city.

Hiring intentions and the pipeline

The survey's forward hiring sub-index rose to 51.7, its highest level in six quarters. Thirty-one per cent of respondents said they intended to add staff or convert contractors to permanent roles within the next six months, up from 26 per cent in the June survey. Businesses expecting headcount to fall fell to 21 per cent, from 28 per cent.

The chamber's economic research unit described the shift as consistent with the broader state data, noting that NSW employment growth has held above the national average through 2026. The most commonly cited constraint remained finding qualified staff, named by 41 per cent of respondents, ahead of demand softness at 29 per cent and cash flow at 24 per cent.

The chamber recommended the state government prioritise unfunded projects with a high economic return rather than expand energy rebates, on the basis that input cost relief is now largely delivered by market conditions rather than policy.

Investment intentions and cash flow

Capital expenditure intentions improved for the first time in seven quarters, with 24 per cent of respondents reporting a committed spend on equipment, vehicles or fit-out in the next twelve months. Working capital stress eased too: businesses reporting late payments as a top-three problem fell to 33 per cent, from 44 per cent in the June survey.

Equipment finance write-offs, which peaked in early 2026, are the other bright spot. Lenders report that business arrears are the lowest in four years, and that most referrals now concern documentation rather than repayment capacity.

The view from the regulator and the ABS

The NSW Small Business Commissioner continues to run a free advisory service and has been reviewing the sector's complaint volumes, which the office says are running about 12 per cent below the same period in 2025, with lease disputes and late payment the two most common categories.

Bureau of Statistics retail data for August, released in September, showed discretionary retailing up 0.4 per cent in the month on a seasonally adjusted basis, and hospitality up 0.6 per cent, both modest readings consistent with the survey's caution rather than its optimism.

The chamber's next survey window runs from 5 to 23 October, with results due in late November. Roughly 4,900 of the 12,000 small businesses registered in the state were invited to respond this quarter, giving the index a response rate of 13 per cent, which the chamber acknowledges is a source of bias toward established operators.

The NSW Small Business Commissioner runs the advice line separately, and the two organisations note that complaint data and sentiment data frequently move in opposite directions. For related coverage, see the Business & Markets hub.