Sentiment Regarding Economic Conditions Declines Steeply as SMEs Face Numerous Challenges

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 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. 

Table 1: Quarterly Revenue Change

Quarterly rev

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.

Table 2: Expectations Regarding Economic Conditions

Econoic conditions

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.

Table 3: Approach to Growth in 2022

Growth predictions

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.

Table 4: Job Vacancies


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.

Table 5: Approach to Business Growth in 2022


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.

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.

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.

James Organ

Written by James Organ

I have been working in market research for nearly 30 years and remain dedicated to solving problems and creating great insight and content for our many clients.

Topics: Business Priorities strategic planning CX Articles & Insights market research

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