The latest edition of the SME Sentiment Tracker prepared by business market research firm Fifth Quadrant and Ovation highlighted the continuing decline in year-on-year revenues among small and medium enterprises (SMEs) with 37 per cent reporting diminished revenues compared to last year.
Profitability has declined as per the report with only 40 per cent of SMEs reporting a profit last month. Meanwhile, recruitment activity remained stagnant as well as the number of growth-oriented businesses.
Despite these figures, the research also noted that business concerns have gradually receded across various fronts, which is attributed to the gradual easing of inflationary pressures coupled with a steady cash rate in July and August.
In particular, concern about rising interest rates has fallen from 87 per cent in June to 81 per cent in July and 65 per cent of SMEs feel well poised to weather the potential impact of an impending recession over the next 12 months. Still, 48 per cent of those with 20-99 employees express unease about their ability to withstand a recession.
Sentiment towards the Australian economy saw a slight uptick in July, yet remains low overall. Business confidence and short-term revenue expectations continue to trend downwards, with 20 per cent foreseeing a decline in revenues over the next month.
Satisfaction with the federal Labor government’s ability to support business needs remains modest at 29 per cent. Despite this, 74 per cent of SMEs stand in support of the recent 5.75 per cent increase to the minimum wage amidst Australia’s ongoing cost of living crisis.
Fifth Quadrant, Managing Director James Organ commented,“In summary, this month’s data underscores the challenging environment SMEs continue to navigate, with declining revenues and profitability casting shadows on growth prospects. The RBA’s decision to leave interest rates unchanged in July and August will be welcomed by SMEs, but the ongoing decline in consumer spending will cause more pain at least for the short term and hence job losses are likely to increase.”
