SMEs are defying the odds, with 47% reporting profits this month, a noticeable uptick from the previous month’s 40%. Job opportunities are on the rise, too, with 24% actively recruiting, up from 19% in July.
Following a sustained period of declining revenue and profitability, the latest findings from the August edition of the Fifth Quadrant SME Sentiment Tracker suggest a renewed sense of confidence within the small and medium-sized enterprise (SME) sector. This newfound optimism appears to be in sync with decreasing inflation rates and the stabilization of interest rates.
Despite ongoing year-on-year revenue declines, SMEs are showing signs of improved financial health. More notably, 33% of these businesses anticipate an increase in their revenues over the next four weeks, marking a substantial jump from the 22% recorded in the previous month. Decision-makers within these SMEs also seem to be less concerned about rising operational costs and are exhibiting greater confidence in both local and global economic conditions. This renewed sense of positivity is reflected in the Fifth Quadrant Business Sentiment Index, which has risen from 87 to 105.
The SME Sentiment Tracker, conducted by the esteemed business market research firm Fifth Quadrant in collaboration with Ovation, provides invaluable insights by monitoring business sentiment across a sample of small and medium-sized enterprises on a monthly basis.
With greater certainty surrounding interest rates and operational expenses, recruitment activities have surged once more. Presently, one in four SMEs (24%) are actively seeking to fill job vacancies, a notable increase from the 19% reported in July. These statistics paint a more bullish picture for SMEs as they approach the critical Christmas trading season. Consequently, 37% of all SMEs are now directing their focus towards growth over the next 12 months, marking the highest level reported since October 2022.
Another encouraging development is the rise in capital expenditure, with 30% of SMEs planning to increase their investments over the next three months. Equally noteworthy is the fact that only 9% of SMEs anticipate difficulties in meeting loan repayments over the next six months, a substantial decrease from the 16% recorded in July. These positive indicators collectively suggest that SMEs are not only weathering the storm but are actively gearing up for a period of growth and stability.
Fifth Quadrant, Managing Director, James Organ said: “In summary, despite ongoing challenges, the August findings indicate a brighter outlook for SMEs. Confidence is on the rise, and businesses are more optimistic now than they were earlier in the year.
“Growth initiatives are back on the agenda with recruitment and capital investment bouncing back as we approach the final quarter of another very challenging year. Only time will tell, but hopefully this is a turning point for SMEs”.
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