Updates to this research will be published monthly to track the impact and response to COVID-19. View previous wave.
The latest wave of the COVID-19 SME Research Tracker shows that SME decision makers once again reported stronger data with revenue, profit and employment indicators all continuing to strengthen in December.
While 50% of SMEs report lower revenues than prior to the pandemic, 18% now report revenue growth. This is the largest reported growth since the research commenced in April 2020, with Victorian SMEs rebounding strongly since restrictions were lifted.
Table 1: Impact On Revenue Due To COVID-19
Importantly, 53% of SMEs also reported a profitable November, up from only 35% in August when lockdowns were in place. Accordingly, one quarter of SMEs were recruiting in December compared to 20% in the same period last year. Unfortunately, with the greater demand for employees and the ongoing spread of the pandemic, recruitment continues to be difficult for 85% of respondents, with the lack of candidates applying for positions the major challenge followed by a lack of skilled or qualified candidates.
Table 2: Job Vacancies
While the December data was reasonably positive, SME decision makers are expecting difficult business conditions over the next 3 months, both locally and globally. As case numbers grow exponentially, resourcing and supply chain issues are likely to exacerbate and therefore confidence will continue to be diluted until we have more certainty regarding living with the pandemic without Government support.
Table 3: Expectations Regarding Economic Conditions (Next 3 Months)
Despite these short-term challenges, it is positive to report that SMEs are expecting a more positive 2022, with 50% targeting growth. To support these growth initiatives, investment intentions are also trending up with increases across all key categories including capital investment (23%), employee numbers (21%) and marketing spend (23%). In an environment where employees will be hard to attract and retain, 27% of SMEs expect wages to increase over the next 3 months, compared to just 10% back in August 2020.
Table 4: Expectations Regarding Business Investment (Next 3 Months)
After a bounce in November, satisfaction with the Federal government is again in decline as SME decision makers question the effectiveness of the pandemic management. 36% are now dissatisfied compared to 30% in November.
In summary, many SMEs finished 2021 on a more positive note with most key indicators trending up. However, business confidence is extremely tenuous with a high level of uncertainty regarding 2022 due to the accelerating spread of COVID and the associated impact on demand, staff and the supply chain.
Please click on this link to access the full report including subgroup analysis by industry sector, size of business and State. Fifth Quadrant and Ovation Research will publish updates of this research to track the impact and response to COVID-19. Hopefully the results will continue to become more positive as we work through this crisis together.