The latest edition of SME Sentiment Tracker by Fifth Quadrant and Ovation has revealed that SME revenues continue on their downward trend. As a result, small-business owners are holding back on growing their businesses.
40 per cent of SMEs report lower revenues than 12 months ago, well above the 29 per cent who said the same in February.
The most significant declines are in the distribution, retail, production, and construction sectors, highlighting the widespread impact on sectors foundational to overall economic stability. Additionally, loan stress is steadily increasing, with 13 per cent of SMEs expecting difficulties making debt repayments over the next three months, up from nine per cent in April.
Given the heightened economic uncertainty and the emphasis on cost management, the report noted that growth ambitions are being deprioritised by many businesses as they focus on sustaining operations rather than expanding. In fact, only 32 per cent of SMEs are focused on growth, compared to 44 per cent in February.
The labour market is reflecting these economic pressures. All employee indicators are trending downward, suggesting a tough time for job hunters in the short term. Consequently, recruitment activity remains well below the norm, currently at 16 per cent, compared to 26 per cent six months earlier.
On the other hand, confidence in both the Australian and global economies has seen a slight improvement since the spike last month. However, with increasing discussions about potential recessions globally, any hopes of recovery might be short-lived.
Fifth Quadrant’s Managing Director, James Organ, said: “In summary, revenue and sentiment continue the ongoing decline that began in early 2024. Consequently, growth aspirations are on hold, with cost management and efficiency becoming key priorities, especially as interest rates are unlikely to be lowered anytime soon. Recruitment activity remains low, and we expect unemployment to keep rising in 2024.”
