Interest rate cuts towards the end of 2012 have done little to ease business concerns about the soft state of the local economy, the December quarter SME survey from NAB suggests.

SME confidence and conditions weakened a touch in Q4; same with sentiment and activity.

The deterioration in activity reflected declines in profitability and employment, while trading conditions were unchanged. Forward indicators of demand, although improving, remained poor, especially forward orders and stock levels. Furthermore, while capacity utilisation lifted marginally in the quarter, it remained close to record lows and below that reported by larger firms.

Retail was among the weaker categories along with manufacturing, wholesale and construction across SMEs and larger firms. Looking at business conditions retail was -14 points. This was in line with confidence in the December quarter where for retail it remained unchanged.