growth expectations surge amid strengthening economic sentiment

Updates to this research are published monthly. View previous wave.

The latest wave of the Fifth Quadrant SME Sentiment Tracker reveals optimism towards both domestic and international economic conditions has significantly risen.

short-term economic expectations

Only 37% of respondents now expect domestic economic conditions to weaken in the next three months, a substantial decrease from 69% in February 2023.

business growth

This optimism is mirrored in growth expectations, with nearly one in two businesses (44%) focusing on growth over the next 12 months, marking the highest level of optimism since the research commenced. As inflation continues to moderate, concerns about interest rates have sharply decreased, contributing to a more stable and predictable economic environment for businesses and consumers alike


February’s financial indicators highlight a continued positive trajectory that began in mid-2023, with the year-on-year revenue metric improving to -2 (compared to -21% in August). This steady recovery is further evidenced by the significant rise in SME profitability, with 51% of SMEs reporting profits, surpassing figures from the corresponding periods in 2022 (39%) and 2023 (43%).


February also witnessed a substantial rebound in short-term revenue expectations, with a net score of 25% (compared to 0%) last month. The employment outlook also remains positive, with 17% of businesses expecting to increase staff numbers over the next three months.

finance requirements

Following a spike in December, the demand for additional finance over the next 3 months has decreased slightly to 14%. However, it is notable that a significant proportion of this finance is aimed at supporting growth initiatives and facilitating the acquisition of equipment, machinery, or plant.

government policy

It is also noteworthy that satisfaction with the Federal Labor Government has reached its highest level in the last 12 months, following the announcement of lower inflation in early 2024 and the overhaul of stage 3 tax cuts.

The SME landscape is marked by a wave of optimism, underpinned by significant improvements in economic sentiment and financial performance. The shift to a predominantly positive outlook reflects easing inflationary pressures, enhanced revenue prospects, and a strong focus on growth and investment. Despite the backdrop of potential economic challenges, SMEs signal a promising year ahead

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 publish monthly updates of this research.