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SME revenue and profit ticking up despite supply chain squeeze

MEDIA RELEASE: May 9 2022: Having navigated the worst of the pandemic, SMEs are now dealing with new challenges, but sentiment is generally more positive this month.

Although 50% of SMEs continue to report lower revenues than before the pandemic, the upward trend for both turnover and profit since February has continued. Only 23% of SMEs reported a financial loss in April compared to 31% in March.

Confidence regarding economic conditions has also bounced off lows, with 33% of SMEs expecting a stronger Australian economy over the next 3 months, compared to only 20% last month. However, growth aspirations are being impacted as 58% of SMEs report supply chain issues and 45% staff and/or skills shortages.

It is also positive to report the strongest level of optimism about business survival since the inception of the research. Only 12% are now very concerned about their future, compared to 17% at the beginning of 2022.

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.

Reflecting the tight labour market, the net change in employment since the pandemic began has dropped to -3% in April, compared to -10% in January. In addition, 28% of SMEs are currently recruiting and therefore competition for talent remains fierce with 85% of SMEs finding it difficult to fill roles. To ease recruitment challenges, 51% of SME decision makers believe migrant worker quotas should be increased.

With increasing costs and rising interest rates it is not surprising that investment intentions across most categories are in decline and the demand for finance is subsiding. Only 11% of SMEs indicated a need for additional finance over the next 3 months compared to 18% in January.
30% of SMEs are satisfied with the Federal Government as we approach the election, but 31% are dissatisfied. Accordingly, the final weeks of the campaign and specific policy initiatives aimed at SMEs will be critical in capturing votes from business decision makers.

ACA Research, Managing Director, James Organ said: “In summary, sentiment in April was robust despite challenging business conditions. SMEs continue to demonstrate resilience, but it will be interesting to see how rising interest rates and the outcome of the Federal election impact business confidence during May”.

Websites: ACA Research and OVATION/ TEG Insights

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