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Economic environment remains difficult for many SMEs

MEDIA RELEASE: April 6 2022: With a backdrop of the ongoing pandemic, skills shortages, supply chain issues, weather, war and fuel prices the economic environment remains difficult for many SMEs.

Accordingly, the recovery continues to stagnate with 52% still reporting lower revenues than prior to the pandemic. Revenues over the first 3 months of 2022 have been patchy compared to the end of 2021 with a third of SMEs reporting lower turnover this year.

Confidence regarding economic conditions over the next 3 months has declined significantly, with 56% of SMEs expecting a weaker global economy compared to 26% last month. With war in Ukraine now in its 2nd month the level of concern is growing regarding the longer-term impact on economic conditions, both globally and locally. With weaker confidence it’s not surprising that a higher proportion of SMEs predict less capital investment (21%) and marketing (20%) over the next 3 months.

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.

Despite declining confidence in economic conditions, growth expectations for the next 12 months remain in place. However, there is a concerning spike in SMEs downsizing or exiting, particularly in NSW and in the Hospitality sector.

The proportion of SMEs with job vacancies continues to fluctuate as sentiment declines. Currently, 25% have vacant job roles compared to 29% a month earlier. Increasing wage demands and a lack of candidates have spiked in March making recruitment very difficult for 44% of SMEs. Two-thirds now believe it is more difficult to recruit than it was before the pandemic. Staff shortages (46%) and supply chain issues (54%) are now a significant threat to growth expectations as SMEs are unable to operate at full capacity or execute on growth plans due to these challenges.

Over the last month satisfaction with the Federal Government has improved slightly as the election draws closer, however satisfaction in NSW is very weak with 35% of SMEs being dissatisfied.

ACA Research, Managing Director, James Organ said: “In summary, sentiment regarding economic conditions both globally and locally have significantly declined as SMEs face a growing number of challenges. While growth expectations remain in place for the next 12 months it is likely plans will be downgraded if SMEs are required to endure these ongoing business restraints and cost pressures over an extended period”.

Websites:  ACA Research and OVATION/ TEG Insights

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