Confidence and optimism among SMEs owners have dropped off this month, with the problems surrounding the COVID vaccine rollout and Victoria’s snap lockdown putting a dent in the upward curve the SME sector perceived in April.
The latest COVID-19 SME Tracker, conducted by business market research firm ACA Research in partnership with TEG Insights, reveals that sentiment across the country has fallen across many key performance indicators including revenue, profit, employment and capital investment.
The number of SMEs reporting that their revenue is lower than pre-pandemic times has increased to 46 per cent, compared to 43 per cent in April. This decline is primarily the result of lower demand from existing and new customers due to restrictions imposed to stop the spread of COVID and the fact that Australia’s international borders remain closed.
However, the sector is bucking the downward trend in sentiment when it comes to job creation, with the report revealing that the proportion of SMEs taking on new staff has increased to 25 per cent from 23 per cent in April. The recruitment drive is not straightforward, with 94 per cent of SMEs reporting that it is difficult to fill vacant roles, including 40 per cent who say that hiring is harder now than it was before the pandemic struck.
The fall in confidence in the recovery of both local and global economies has dampened expectations about business investment over the next three months, with only 24 per cent of SMEs forecasting that it will rise, down from 26 per cent last month.
On the plus side, the approach of end-of-financial-year means a rise in the expectation that investment in technology and office equipment will increase.
“In summary, market sentiment in May was softer,” ACA Research Managing Director, James Organ, said. “Clearly, some SMEs were impacted by the end of JobKeeper, but the ongoing issues associated with the vaccine rollout also affected confidence.
“With Melbourne now in lockdown for the fourth time it is unlikely sentiment will rebound In June, unless restrictions are lifted quickly,” Organ added. “Access to skilled staff is also becoming a major problem for many SMEs and hence the Government will be under significant pressure to allow skilled workers into Australia to support the ongoing recovery.”