PRESS RELEASE: Challenging Landscape Persists as SME Revenues Decline

This month’s findings offer a snapshot of persistent challenges and a glimmer of hope. The downward trajectory of year-on-year revenues remains concerning, with a significant 37% reporting diminished revenues compared to this time last year. Profitability also continues its downward trend, with only 40% of SMEs reporting a profit last month.

However, it is encouraging to report that business concerns have gradually receded across various fronts. The gradual easing of inflationary pressures coupled with a steady cash rate in July and August offers SMEs a glimmer of respite. Notably, concern about rising interest rates has fallen from 87% in June to 81% in July.

The SME Sentiment Tracker is conducted by leading business market research firm Fifth Quadrant in partnership with Ovation and tracks business sentiment across more than 400 small and medium enterprises each month.

Recruitment activity remains stagnant; so too the number of growth-oriented businesses. It is notable that two-thirds (65%) of SMEs feel well poised to weather the potential impact of an impending recession over the next 12 months. However, a concerning 48% of those with 20-99 employees express unease about their ability to withstand a recession.

Sentiment towards the Australian economy saw a slight uptick in July, yet remains low overall. Business confidence and short-term revenue expectations continue to trend downwards, with 20% foreseeing a decline in revenues over the next month.

Satisfaction with the federal Labor government’s ability to support business needs remains modest at 29%. Despite this, 74% of SMEs stand in support of the recent 5.75% increase to the minimum wage amidst Australia’s ongoing cost of living crisis.

Fifth Quadrant, Managing Director, James Organ said: “In summary, this month’s data underscores the challenging environment SMEs continue to navigate, with declining revenues and profitability casting shadows on growth prospects. The RBA’s decision to leave interest rates unchanged in July and August will be welcomed by SMEs, but the ongoing decline in consumer spending will cause more pain at least for the short term and hence job losses are likely to increase.”