Updates to this research will be published monthly to track the impact and response to COVID-19. View Previous Wave.
The latest wave of the COVID-19 SME Research Tracker shows that having navigated the worst of the pandemic, SMEs are now dealing with new challenges, but sentiment is generally more positive this month.
Although 50% of SMEs continue to report lower revenues than before the pandemic, the upward trend for both turnover and profit since February has continued. Only 23% of SMEs reported a financial loss in April compared to 31% in March.
Table 1: Profit
Confidence regarding economic conditions has also bounced off lows, with 33% of SMEs expecting a stronger Australian economy over the next 3 months, compared to only 20% last month. However, growth aspirations are being impacted as 58% of SMEs report supply chain issues and 45% staff and/or skills shortages.
Table 2: Approach to Business Growth in 2022
It is also positive to report the strongest level of optimism about business survival since the inception of the research. Only 12% are now very concerned about their future, compared to 17% at the beginning of 2022.
Table 3: Level of Concern About Business Survival
Reflecting the tight labour market, the net change in employment since the pandemic began has dropped to -3% in April, compared to -10% in January. In addition, 28% of SMEs are currently recruiting and therefore competition for talent remains fierce with 85% of SMEs finding it difficult to fill roles. To ease recruitment challenges, 51% of SME decision makers believe migrant worker quotas should be increased.
Table 4: Impact on Staff Numbers
With increasing costs and rising interest rates it is not surprising that investment intentions across most categories are in decline and the demand for finance is subsiding. Only 11% of SMEs indicated a need for additional finance over the next 3 months compared to 18% in January.
Table 5: Expectations Regarding Finance Needs
30% of SMEs are satisfied with the Federal Government as we approach the election, but 31% are dissatisfied. Accordingly, the final weeks of the campaign and specific policy initiatives aimed at SMEs will be critical in capturing votes from business decision makers.
In summary, sentiment in April was robust despite challenging business conditions. SMEs continue to demonstrate resilience, but it will be interesting to see how rising interest rates and the outcome of the Federal election impact business confidence during May.
Please click on this link to access the full report including subgroup analysis by industry sector, size of business and State. ACA Research and Ovation Research will publish updates of this research to track the impact and response to COVID-19. Hopefully the results will continue to become more positive as we work through this crisis together.