Alan Oster, NAB Group chief economist said that in line with the impact of lockdowns and reopening on larger businesses, confidence among SMEs surged in Q4 – particularly in the major eastern states where restrictions had previously been in place.
Additionally, SME business conditions also rose, with conditions improving for SMEs in every state with improvements in trading conditions and profitability driving the result, and the employment index edging down.
“SMEs were able to share in the rebound experienced by larger firms, and it was particularly pleasing to see that the smallest SMEs reported the largest improvement in conditions,” said Mr Oster. “Conditions returned to positive territory in NSW and Victoria, reflecting the resumption of activity in the major states as health-related restrictions were lifted.”
Confidence rose in all sectors other than health, while there were mixed results for conditions. Accommodation and food saw confidence rebound more than 50 pts and conditions in the sector also improved but remained in negative territory at -16 index points. Construction, wholesale, retail, and property also saw conditions strengthen, while finance and transport saw conditions fall.
“Small businesses in the hospitality sector have been some of the hardest hit throughout the pandemic,” said Mr Oster. “SMEs in the hospitality sector reported an improvement in conditions in Q4 but were still in negative territory and we know that since then these same businesses will have faced further disruption from the Omicron outbreak. Still, the broader improvement in conditions among retail and construction SMEs was a positive sign.”
Mr Oster said the survey showed a more positive outlook for SMEs in Q4.
“Many businesses will have faced disruptions related to the Omicron outbreak, but the strength of the rebound leading into the end of the year will have put businesses in a stronger position to manage that disruption,” he said.
“As the Omicron outbreak begins to ease, the survey results suggest SMEs will again be well positioned to take advantage of a rebounding economy over the coming months.”