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Positive end to 2021, but SME confidence is weakening

MEDIA RELEASE: January 13 2022: SME decision makers once again reported stronger data in December with revenue, profit and employment indicators all continuing to strengthen.

While 50% of SMEs report lower revenues than prior to the pandemic, 18% now report revenue growth. This is the largest reported growth since the research commenced in April 2020, with Victorian SMEs rebounding strongly since restrictions were lifted.

Importantly, 53% of SMEs also reported a profitable November, up from only 35% in August when lockdowns were in place. Accordingly, one quarter of SMEs were recruiting in December compared to 20% in the same period last year. Unfortunately, with the greater demand for employees and the ongoing spread of the pandemic, recruitment continues to be difficult for 85% of respondents, with the lack of candidates applying for positions the major challenge followed by a lack of skilled or qualified candidates.

The COVID-19 SME Tracker is conducted by leading business market research firm ACA Research in partnership with Ovation and tracks the impact of COVID-19 across more than 400 small and medium enterprises each month.

While the December data was reasonably positive, SME decision makers are expecting difficult business conditions over the next 3 months, both locally and globally. As case numbers grow exponentially, resourcing and supply chain issues are likely to exacerbate and therefore confidence will continue to be diluted until we have more certainty regarding living with the pandemic without Government support.

Despite these short-term challenges, it is positive to report that SMEs are expecting a more positive 2022, with 50% targeting growth. To support these growth initiatives, investment intentions are also trending up with increases across all key categories including capital investment (23%), employee numbers (21%) and marketing spend (23%). In an environment where employees will be hard to attract and retain, 27% of SMEs expect wages to increase over the next 3 months, compared to just 10% back in August 2020.

After a bounce in November, satisfaction with the Federal government is again in decline as SME decision makers question the effectiveness of the pandemic management. 36% are now dissatisfied compared to 30% in November.

ACA Research, Managing Director, James Organ said: “In summary, many SMEs finished 2021 on a more positive note with most key indicators trending up. However, business confidence is extremely tenuous with a high level of uncertainty regarding 2022 due to the accelerating spread of COVID and the associated impact on demand, staff and the supply chain.”

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About the COVID-19 SME Monthly Tracker
• Based on responses from ~400 SMEs with up to 500 employees across all sectors in Australia, including metro and regional locations.
• This wave includes data collected from 6th to 17th December 2021.
• Each respondent is a financial decision maker/ influencer in their business. • Data is weighted by state and number of employees to reflect the national distribution of businesses across the country.

Websites: ACA Research and OVATION/ TEG Insights

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