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SMEs investing in growth

MEDIA RELEASE: June 10 2022: Despite the squeeze in economic conditions, revenue, profit and growth expectations continue to rebound amongst SMEs in Australia.

47% convey lower revenues than before the pandemic, but this is the lowest level reported since May 2021. Profit also continues to climb with 49% of SMEs reporting a profit in May, compared to only 39% in February.

However, SME decision makers (48%) do expect economic conditions to soften over the next 3 months, both globally and locally. In addition, the impact of supply chain issues continues to hinder business prospects with 55% of SMEs impacted by delays and availability. This rises to 78% in the construction industry.

The SME Sentiment Tracker is conducted by leading business market research firm ACA Research in partnership with Ovation and tracks business sentiment across more than 400 small and medium enterprises each month.

Despite the numerous headwinds, investment intentions in people, marketing and equipment are expected to remain steady over the next 3 months. The demand for finance has increased slightly after 3 months of decline with 13% of SMEs needing additional finance compared to 11% in April. Finance for working capital and for funding growth have both spiked.

The proportion of SMEs with job vacancies also continues an upward trajectory rising from 23% in January, to 29% this month. However, 72% of those with vacant positions believe recruiting is now more difficult than before the pandemic. This is the highest recorded since the inception of the research. Accordingly, there is an increasing demand from SMEs (54%) for the Government to increase skilled migration quotas, particularly amongst the hospitality sector (79%).

On a positive note, staff mobility has increased with 56% of SMEs that fly domestically for business resuming travel. The equivalent for international destinations is 25%.

ACA Research, Managing Director, James Organ said: “In summary, SME sentiment in May remained solid. Decision makers are realistic about the difficult economic conditions but continue to invest in growth despite ongoing challenges with supply chains and people. With another jump in interest rates just announced sentiment could decline, but the uplift in mobility should be positive for many businesses including retail and hospitality.

Websites: ACA Research and OVATION/ TEG Insights

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