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Weaker SME sentiment

MEDIA RELEASE: July 16 2022: Strong rebound in revenues during June, with 23% of SMEs now reporting a higher turnover than prior to the pandemic. Profit also continues an upward trend with only 15% reporting a loss compared to 31% in March.

Growth expectations remain steady at 40%, with only 7% expecting to downsize or exit their business over the next 12 months. Expectations for short term revenues are also positive with 29% expecting higher revenues in July.

The proportion of SMEs employing more staff than prior to the pandemic also continues to grow, rising from 10% in April, to 20% in June. Job vacancies are also on the up, rising from 23% in January, to 31% in June. While recruitment challenges are still significant, less SMEs believe it is very difficult to recruit (29%) compared to 44% reported in March.

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 strong financial and employment indicators, the proportion of SMEs expecting an economic downturn continues to grow, with 55% now expecting weaker conditions in Australia over the next 3 months compared to 29% in April. Difficult operating conditions will be compounded by significant challenges with most SMEs concerned about fuel costs (86%), rising inflation and interest rates (79%) and ongoing supply chain issues (78%). Accordingly, investment intentions have started to reverse with 25% intending to reduce capital investment and 21% marketing spend over the next 3 months.

The new Labour Government has significant work to do to increase support amongst SMEs with only 30% being confident they will deliver effective policies to support their needs during these challenging economic times.

ACA Research, Managing Director, James Organ said: “In summary, SMEs continue to perform strongly, but expect difficult economic conditions to impact over the next 3 months. Rising fuel prices, inflationary pressures and ongoing supply chain issues will be significant and hence SMEs will look to the new Government to implement policies that will reduce rising costs and support growth.

Websites: ACA Research and OVATION/ TEG Insights

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