SME August 2026: SME growth ambitions rebound, but for how long?

Are Australian SME growth ambitions recovering? August data points to a sharp rebound in confidence, although weak revenue, rising loan stress and renewed interest rate risks suggest the recovery remains fragile.

SME August 2026: SME growth ambitions rebounded sharply in August, with net growth intent jumping from +4% to +26%, the strongest result since October. With the RBA holding the cash rate at 4.35% for a second consecutive meeting, some of the uncertainty that weighed on confidence through the first half of the year appears to have lifted. Economic expectations also improved, although both the Australian and global measures remain deeply negative.

Revenue improves, but small business lags

Revenue lifted to a net -8%, its best result since October, and short-term revenue expectations recovered to -2%, while profitability edged higher but remains below its 13-month average. Larger SMEs continue to outperform, strengthening to +36% on revenue against -11% for smaller businesses.

Wage pressure eases as hiring picks up

Labour market pressures eased considerably. The share of SMEs expecting wage increases fell from 30% to 19%, unwinding July’s award wage spike, while hiring intentions rose for a second consecutive month. Recruitment activity continued to build, with 15% of SMEs now trying to fill roles, although the increase came almost entirely from larger businesses, where 55% are currently recruiting.

Borrowing rises alongside growing loan stress

Financial conditions are more mixed. Demand for additional finance rose to 12%, with a growing share of that borrowing intended to fund growth in Australia. However, loan stress reached its highest level in 13 months, with more than one in ten SMEs expecting difficulty meeting repayments over the next six months.

Conclusion

Overall, August marks a clear turn in SME confidence. Growth ambitions, hiring intentions and borrowing have all strengthened, and cost pressures have eased from recent highs. However, revenue remains negative and a rising minority of SMEs are struggling to service existing debt. The recovery may also prove short-lived. Since this data was collected, underlying inflation has stayed above the RBA’s target band, prompting several major banks to forecast a further rate increase at its next meeting in late September, which would test the confidence that returned in August.

Please click the link below 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 SME market research here. For any questions or inquiries, feel free to contact us here.

These findings are based on the Fifth Quadrant SME Tracker, a monthly study of Australian small and medium-sized businesses launched in April 2020. Each wave includes a minimum of 400 business owners and financial decision-makers from SMEs with up to 500 employees, with results weighted by industry, state and business size to reflect the national SME population.