ACA Research’s monthly SME COVID tracker report shows that despite revenues remaining subdued, SME sentiments have continued to grow because of lockdowns being lifted.
SME sentiment remains strong
As the majority of Australians exited lockdown in October, ACA reports short-term revenue growth is rebounding quickly. Sentiments amongst decision-makers remain cautious, with 51 per cent of decision-makers still concerned about their business’s survival.
The number of decision-makers concerned about their business’s survival has fallen from 55 per cent last month. Showing decision-makers are more optimistic about the future. At the same time, the number of businesses for whom survival is not a concern has grown. The business community has gained confidence as they have opened their doors after long months of lockdown.
James Organ, the managing director of ACA Research, said, “In summary, revenue and employment data remain weak amongst SMEs, but with the end of lockdowns the level of optimism continues to grow and hence concerns about business survival, and health and wellbeing have subsided.
“While SMEs remain cautious, it is likely sentiment will strengthen over the next 2-3 months as SMEs benefit from an increase in consumer spending.”
Impact on revenue
Revenues remained stable this month, with 57 per cent of businesses once again reporting a decline in revenue. Despite declines in revenue holding at 57 per cent, the number of firms reporting an increase in revenue has risen to 13 per cent, compared to 11 per cent in September.
In line with revenues, 32 per cent of SMEs expect their revenue to increase in November.
Victorian SMEs were hit the hardest in October. On average, Victorian businesses reported a 7 per cent drop in revenue. Meanwhile, 31 per cent of SMEs in WA are now reporting stronger revenues than pre-COVID. Positive profits margins were up by 2 per cent across the country in October.
Improvement in profit margins is a vital sign that SMEs are beginning to recover from lockdowns. However, 36 per cent of SMEs are still reporting losses. Profit and revenue figures include government stimulus and support measures.
With both revenues and profits improving this month, SMEs are more optimistic about the future, and hence the concern about business survival continues to decline. Thirty-four per cent of SMEs were not that concerned with the survival of their business; this is the highest level seen since June of 2021.
Jobs post lockdown
The end of lockdown across most of the country has been generally good news for SMEs. Despite this, job vacancies were the lowest they had been since November 2020; just 18 per cent of SMEs were hiring.
Staff numbers grew by 1 per cent in October, with 32 per cent of SMEs reporting a decline in staff numbers. Only 7 per cent of businesses said they onboarded new staff in November, compared to 10 per cent in October. At the same time, the data shows that companies trying to hire found it more difficult in October than in September.
Interestingly, working from home (WFH) conditions remained popular despite the end of lockdown; SMEs said that more than half of their current team remained working from home. Fifty-one per cent of staff worked from home in October, compared to 46 in September.
Overall, SME confidence in revenues and economic conditions has grown as lockdowns have ended. Thirty-eight per cent of SMEs now expect Australia’s economy to strengthen over the next quarter, a considerable jump from 17 per cent only two months ago.
Government support
ACA’s report found that approval of government support and handing increased again on September’s numbers. However, more than one-third of SMEs remain unsatisfied. Thirty-seven per cent of SME decision-makers now feel the Federal Government response has been inadequate, representing a 6 per cent decrease on September’s figures.
In NSW, businesses felt more satisfied with the state government’s response. The report stated, “Significant lift in satisfaction with the NSW Government demonstrates that the new premier has strong support.”
In Victoria, satisfaction with the state government fell by 1 per cent, a marked improvement on September, when approval dropped by 10 per cent.
The report stated, “In line with the expected economic rebound, satisfaction with the Federal Government has increased from lows of 30 per cent in August to 38 per cent this month. The negative sentiment in NSW has also diminished with the end of lockdowns. Support for the new premier seems strong with 50 per cent satisfied compared to the 24 per cent reported in September before the change of leadership.”
Other key findings:
- In line with more positive sentiment, concern regarding health and wellbeing is reducing.
- Vaccination rates among SME decision-makers continue to grow, with 84 per cent having had at least one jab. Positive that only 4% claim to be unlikely to get vaccinated, but this increases to 14 per cent in SA
- Despite the ongoing increase in business sentiment, capital investment is not likely to increase significantly over the next three months as SME decision-makers take a cautious approach, waiting for more clarity regarding the strength and speed of the economic recovery.
- Forty per cent of SMEs believe skilled migrants are required now, and hence the Government needs to act quickly to open borders to this important cohort of workers.
- Despite the more positive sentiment, business investment is not expected to increase significantly for the remainder of 2021.
Read more:Sydney’s post lockdown spending boom
Read more:XERO Small Business Index shows SME jobs suffer
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