The latest COVID-19 SME Tracker report from ACA Research indicates that while SMEs are now dealing with new challenges, business sentiment is generally more positive.
The report noted that 50 per cent of SMEs continue to report lower revenue than before the pandemic, but turnover and profit have remained in an upward trajectory since February. In addition, only 23 per cent of SMEs reported a financial loss in April compared to 31 per cent in March.
A third, 33 per cent, of SMEs expect a stronger Australian economy over the next three months, compared to only 20 per cent last month. In addition, the level of optimism among SMEs regarding their future is the strongest level of optimism recorded since the inception of the research, with only 12 per cent very concerned about their future, compared to 17 per cent at the beginning of 2022. However, 58 per cent report supply chain issues and 45 per cent are experiencing staff and/or skills shortages, which can impact these hopes for growth.
In relation to the labour shortages, the report also noted the net change in employment since the pandemic began dropped to -3 per cent in April, compared to -10 per cent in January. Over a quarter, 28 per cent, of SMEs are also currently recruiting, with competition for talent remaining fierce with 85 per cent of SMEs finding it difficult to fill roles. Because of this, 51 per cent of SME decision-makers believe migrant worker quotas should be increased.
With increasing costs and rising interest rates, the report pointed out that investment intentions across most categories are in decline and the demand for finance is subsiding. Only 11 per cent of SMEs indicated a need for additional finance over the next three months compared to 18 per cent in January.
Meanwhile, 30 per cent of SMEs are satisfied with the Federal Government as the election draws near, but 31 per cent are dissatisfied. The report pointed out that the final weeks of the campaign and specific policy initiatives aimed at SMEs will be critical in capturing votes from business decision-makers.
“In summary, sentiment in April was robust despite challenging business conditions,” ACA Research, Managing Director, James Organ, said. “SMEs continue to demonstrate resilience, but it will be interesting to see how rising interest rates and the outcome of the Federal election impact business confidence during May.”
