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SME sentiment slips as tight labour market threatens recovery

MEDIA RELEASE: May 31 2021: Sentiment amongst SMEs throughout Australia is slightly lower across many key performance indicators including revenue, profit, employment and capital investment. It is evident that the ongoing issues surrounding the vaccine rollout dented business confidence and this is unlikely to reverse now that Melbourne is once again in lockdown.

The proportion of SMEs reporting lower revenues than before the pandemic has slightly increased to 46% compared to 43% in April. However, the average revenue decline remains at 14%. Less demand from existing and new customers driven by COVID restrictions and international border closures continues to weigh on many SMEs.

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

Despite slightly subdued data, the proportion of SMEs now hiring has risen to 25% from 23% in April. However, 94% of these businesses claim it is difficult to fill vacant roles, including 40% that believe it is more difficult than it was prior to the pandemic.

In line with other data, confidence in local and global economies has declined slightly and therefore expectations regarding business investment over the next 3 months has dropped to 24% from 26% in April. However, as we approach the end of the financial year, expectations regarding investment in technology and office equipment is increasing.

ACA Research, Managing Director, James Organ said: “In summary, market sentiment in May was softer. Clearly, some SMEs were impacted by the end of JobKeeper, but the ongoing issues associated with the vaccine rollout also affected confidence.

With Melbourne now in lockdown for the fourth time it is unlikely sentiment will rebound In June, unless restrictions are lifted quickly.

Access to skilled staff is also becoming a major problem for many SMEs and hence the Government will be under significant pressure to allow skilled workers into Australia to support the ongoing recovery.

Website: ACA Research

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