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 the stronger data reported by SMEs in December was short-lived as expected. With the Omicron variant peaking in January, revenue, profit and employment data all declined along with sentiment regarding global and local economic conditions.
54% of SMEs reported a revenue decline due to COVID-19, up from 50% in December. SMEs in NSW had a tough January with 70% reporting softer revenues due to the pandemic. It is however positive that 19% of SMEs have now increased revenue during the pandemic and that the average drop is 15%, trending down from 22% in October. Accordingly, it is evident that SMEs are learning to live with COVID-19.
Table 1: Impact On Revenue Due To COVID-19
However, SME decision makers expect difficult business conditions over the next 3 months, with more than 40% expecting economic conditions to weaken locally (40%) and globally (43%). Despite these short-term challenges, 39% of SMEs are expecting growth in the next 12 months.
Table 2: Approach To Business Growth In 2022
With the higher case numbers and weaker business confidence, it’s not surprising that less SMEs (23%) were recruiting in January compared to December (26%).
Table 3: Job Vacancies
Regardless of declining employment and wage data, capital investment and demand for finance remain positive particularly in the IT/Office equipment category. We also continue to see rising demand for plant, equipment, and small trucks.
Table 4: Expectations Regarding Capital Expenditure (Next 3 Months)
Support for the Federal Government continues its recent decline with 43% of SMEs now dissatisfied, compared to 30% in November. It looks like a tough road ahead as we draw closer to the election.
In summary, the expected dip in sentiment was realised in January. However, now that Omicron cases appear to have peaked, we do expect a rebound in confidence as SME revenues once again recover following a challenging holiday 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.