The latest edition of the SME Sentiment Tracker, released by Fifth Quadrant, reveals a continuing increase in profitability and expected revenue among SMEs, with 27 per cent reporting a higher monthly revenue compared to 12 months ago.
The report also highlights the fact that the Fifth Quadrant Business Confidence Index also remains high at 101.
Despite the positive developments, SME optimism is being tempered by rising interest rates and anticipation over the RBA decision in early November to lift these rates, In particular, almost nine in 10 SMEs are concerned about rising interest rates as concern over fuel and energy costs has increased accordingly.
This is reflected in dampened expectations for both the Australian and global economies, with 56 per cent saying they expect the Australian economy to weaken over the next three months. This has also been reflected in the slowdown in recruitment with only 20 per cent advertising vacancies, many of whom still encounter difficulties filling up their needed roles.
Concerns over rising costs has resulted in fewer SMEs feeling prepared to withstand a possible recession over the next 12 months, with those in the retail and hospitality especially worried. The proportion who feel unable to meet their loan repayments has also increased.
“In summary, the October results continue the positive trend in SME confidence with growing revenues and profitability,” Fifth Quadrant Managing Director, James Organ, commented. “SMEs have been more positive since August, but rising interest rates and high fuel and energy costs remain significant areas for concern. As we enter the Christmas trading period it will be interesting to see if sentiment holds up as many consumers adjust their budgets to accommodate the latest interest rate rise.”
The SME Sentiment Tracker is conducted by business market research firm Fifth Quadrant in partnership with Ovation and tracks business sentiment across more than 400 small and medium enterprises each month.
