Living with COVID has taken its toll on how small businesses rate their prospects of success.
ACA research’s latest monthly business sentiment tracker report shows that the Omicron wave quickly dashed the confidence small businesses gained in late 2021.
While the Omicron variant peaked in January, revenue, profit and employment data all
declined along with sentiment regarding global and local economic conditions.
However, small business sentiments are expected to rebound as the wave passes.
Revenue declines in January
The pandemic continues to throw small businesses curveballs. The long-anticipated lifting of lockdown and the resulting spread of COVID-19 plunged businesses across the country into a shadow lockdown.
The report shows that more than half of SMEs reported a revenue decline due to COVID-19 during January. This figure is up four percentage points from December.
SMEs in NSW had a particularly tough month, with up to 70 per cent reporting less revenue due to the pandemic.
The summer holiday period is often regarded as the most important for hospitality and retail businesses. Faced with lower turnover, staffing issues, and global inflation SMEs have had a lacklustre busy season.
However, it is a positive sign that 19 per cent of SMEs have experienced overall increased revenue throughout the pandemic. Additionally, the average drop in revenue trend down from 22 to 15 per cent in January.
Accordingly, it is evident that SMEs are learning to live with COVID-19.
ACA Research, Managing Director, James Organ said, “In summary, the expected dip in sentiment was realised in January. However, now that Omicron cases appear to have peaked, we do expect a rebound in confidence as SME revenues once again recover following a challenging holiday period.”
Exceptions for economic conditions
If the recent holiday season has taught small businesses anything, it’s that the pandemic and its shocks didn’t end with the lockdown.
According to the report, small businesses aren’t expecting conditions to significantly improve over the coming months.
Looking locally, more than 40 per cent of SMEs anticipate weakening economic conditions in the next three months. Globally, almost half of small businesses expect to see no improvement in conditions.
These expectations are down 11 per cent on December’s numbers. Showing small businesses have been hurting over the summer.
However, in the face of the short-term challenges, 39 per cent of SME decision-makers expect to see their businesses grow in 2022.
With the higher case numbers and weaker business confidence, it’s not surprising that fewer SMEs
were recruiting in January compared to December.
In line with the lower recruitment numbers, fewer companies found it difficult to recruit staff in January. However, as conditions ease, it is unlikely this trend will remain as demand for staff strengthens in the new year.
Regardless of declining employment and wage data, capital investment and demand for finance remain positive, particularly in the IT/Office equipment category. Additionally, demand for plant equipment and small trucks continues to rise.
Support for the Government continues to decline
Support for the Federal Government continues its recent decline. Up 15 percentage points, now almost half of SMEs don’t back the Federal Government.
Looking at the report, there is a dichotomy of satisfaction in many States.
Small businesses in NSW were the most dissatisfied with their State Governments response. With 40 per cent wanting the Government to do better. In contrast, small businesses in WA were the most satisfied, where only 17 per cent wanted a better economic response.
It looks like a tough road ahead as the country draws closer to an election.
Read more:Xero Small Business Index shows SMEs boom in the lead up to Christmas
Read more:ACA SME Tracker: Positive end to the year, but SME confidence slips as COVID accelerates
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