The COVID-19 SME Research Tracker showed that with a backdrop of the ongoing pandemic recovery continues to stagnate with 52 per cent of small businesses still reporting lower revenues than prior to the pandemic. Revenues over the first three 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 three months has declined significantly, with 56 per cent of SMEs expecting a weaker global economy compared to 26 per cent last month. With war in Ukraine now in its second 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 per cent) and marketing (20 per cent) over the next three months.
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 per cent have vacant job roles compared to 29 per cent a month earlier. Increasing wage demands and a lack of candidates have spiked in March making recruitment very difficult for 44 per cent of SMEs.
Two-thirds now believe it is more difficult to recruit than it was before the pandemic. Staff shortages (46 per cent) and supply chain issues (54 per cent) 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 per cent of SMEs being dissatisfied.
In summary, sentiment regarding economic conditions both globally and locally has 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.
