SMEs growing in confidence - SMEs remain cautious but optimism is rising

As lockdowns and restrictions are lifted, sentiment regarding economic conditions and short-term revenue growth is rebounding quickly among SMEs despite some level of caution still being felt.

The latest COVID-19 SME Tracker, conducted by business market research firm ACA Research in partnership with Ovation, shows that while 57 per cent of SMEs continue to report lower revenue than before the pandemic, 38 per cent expect economic conditions to improve over the next three months and 32 per cent expect their revenues to increase in November, compared to just 24 per cent in the last wave.

Employment remains subdued with only 18 per cent of SMEs looking to fill positions in October (down from 21 per cent in September), but the report notes that it is expected that the figures will climb as the economy strengthens in the run-up to Christmas. In addition, 40 per cent of SMEs believe skilled migrants should be allowed to enter Australia immediately.

In line with the rebound, satisfaction with the Federal Government has increased from 30 per cent in August to 38 per cent in October. Negative sentiment in NSW has also diminished with the end of lockdowns as support for the new premier is perceived as strong, with 50 per cent expressing satisfaction compared to the 24 per cent reported in September before the change of leadership.

Despite the increased optimism with regards to business sentiment, it is expected that capital investment is not likely to increase significantly over the next three months as SME decision-makers are taking a cautious approach until they get more clarity regarding the strength and speed of the economic recovery. However, they remain positive in relation to the vaccination roll out with 96 per cent intending to get vaccinated up from 92 per cent in September.

“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,” ACA Research Managing Director James Organ said. “While SMEs remain cautious it is likely sentiment will strengthen over the next two to three months as SMEs benefit from an increase in consumer spending.”

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