The latest SME Sentiment Tracker by ACA Research in partnership with Ovation sees all key performance indicators on an upward trend in March, in spite of rising input costs and tightening economic conditions.
The report found that 24 per cent of SMEs generated higher revenues than before the pandemic while 48 per cent were operating at a profit compared to 43 per cent a month earlier.
Still, fears remain as the Australian economy remains in a precarious state, with 67 per cent of SMEs expecting weaker conditions over the next three months and 66 per cent expecting softer global conditions. In addition, 34 per cent do not think they are well positioned to withstand the impact of a recession over the next 12 months and only 30 per cent are focusing on growth compared to the 41 per cent reported in October last year.
While rising interest rates remain a key concern for 80 per cent of SMEs, increasing energy prices (81 per cent) and wage cost (61 per cent) concerns have spiked over the past month. Because of this, 66 per cent of SMEs have had to pass some of these higher input costs onto customers. But looking forward, fewer SMEs (62 per cent) expect this to continue.
In other positive developments, capital investment intentions have also rebounded as the final quarter of the financial year is underway. Intentions to invest have increased across the board, but specifically in technology, machinery and plant.
The research also noted that 56 per cent of SME decision-makers support the federal Labor government’s decision to apply a tax rate of 30 per cent to superannuation earnings on balances above $3 million, with hospitality and distribution sectors most likely to support the change.
“In summary, SMEs remained resilient in March, but despite stronger revenue and profitability figures, rising input costs such as wages and energy remain significant concerns,” ACA Research Managing Director, James Organ, said. “While short-term revenue expectations remain steady, sentiment about economic conditions continues to fall, and hence the fears of a recession are real amongst the SME community.”
The SME Sentiment Tracker tracks business sentiment across more than 400 small and medium enterprises each month.
