As 2022 came to a close, Small and Medium Enterprises (SMEs) were feeling optimistic despite the ongoing economic challenges.
Despite worries about economic conditions, inflation, and energy costs, SMEs ended the year with reasonably strong revenue and employment data.
This optimism, as we enter 2023, can be attributed to several factors, including government stimulus programs, increased vaccinations and the overall improvement in economic conditions. This helped SMEs regain stability, and the revenue growth helped them to maintain their workforce, giving a positive outlook for the future.
The Small and Medium Enterprises (SME) Sentiment Tracker is a tool used to measure small and medium-sized businesses’ economic conditions and outlook.
According to the latest data, there was a strong performance for SMEs in December, with 24 per cent of surveyed businesses reporting higher turnover than before the COVID-19 pandemic. Despite the typical dip in revenues after the Christmas period, expectations for short-term revenues are still positive.
However, overall sentiment about economic conditions in the domestic and international markets remains weak. Negative sentiment appears to have peaked in October, but many SMEs are still concerned about inflation, rising interest rates (84 per cent), and increasing energy costs (81 per cent). As a result, growth expectations for the next 12 months continue to be uncertain.
Growth expectations (Next 12 months)
The employment figures for Small and Medium Enterprises (SMEs) remained relatively consistent in December, with 28 per cent of SMEs actively recruiting new staff, compared to 24 per cent in October. This suggests that recruitment is becoming slightly easier for SMEs. However, despite this improvement, SMEs still have concerns about certain aspects of hiring new staff.
One major concern is the cost of wages, with 60 per cent of SMEs reporting that this is an issue. Another concern is the need for more skilled workers, affecting 56 per cent of SMEs. These concerns may limit the hiring rate and SMEs’ overall growth.
These findings may indicate that despite the improvement in the recruitment process, hiring staff and keeping them still poses a challenge for SMEs. The economy may be recovering, but the labour market is still not fully back to normal.
Job Vacancies
The employment figures for Small and Medium Enterprises (SMEs) remained relatively consistent in December, with 28 per cent of SMEs actively recruiting new staff, compared to 24 per cent in October.
This suggests that recruitment is becoming easier for SMEs compared to before. However, despite this improvement, SMEs still face challenges with regard to hiring new staff.
One of the main concerns among SMEs is the cost of wages, with 60 per cent of SMEs reporting that this is a problem. This can make it more expensive for SMEs to hire new staff, which may limit their overall growth. Another concern among SMEs is the need for more skilled workers available, which affects 56 per cent of SMEs.
This can make it difficult for SMEs to find the right talent to fill job openings, which may lead to unfilled positions or the hiring of more qualified candidates. These concerns may limit the hiring rate and the SMEs’ overall growth, which poses a challenge for SMEs despite the slight improvement in the recruitment process.
In December 2022, the number of job ads in Australia decreased by 2.9 per cent when compared to November last year.
Additionally, when compared to December 2021, the number of job ads in December 2022 had dropped by 8.3 per cent. These figures suggest that the job market in Australia may have slowed down or contracted in the latter part of 2022, particularly when it comes to job postings.
This could be attributed to various reasons, such as economic slowdown, increased automation, seasonality and other external factors. The decline was particularly noticeable in the Information and Communication Technology (ICT) and Hospitality and Tourism sectors indicating that these industries may be more vulnerable to fluctuations in consumer demand and seasonal shifts.
Furthermore, the lack of work in these industries during the holiday season could reduce the number of employees.
Expectations regarding capital expenditure (next three months)
Capital investment among Small and Medium Enterprises (SMEs) is also showing positive signs. According to the data, 25 per cent of SMEs plan to increase their spending on capital investments over the next three months, compared to 18 per cent in September. This suggests that SMEs are becoming more confident in their ability to invest in their businesses.
The data also shows an increase in intentions to invest in specific areas such as commercial real estate and technology. This could mean that SMEs see these areas as opportunities for growth and expansion. Investing in commercial real estate can provide a stable revenue stream and a physical location for the business to operate. Investing in technology can improve efficiency and competitiveness and allow SMEs to adapt to the digital age.
Overall, this data suggests that SMEs are becoming more optimistic about the future and are willing to invest in their businesses to support growth and expansion. However, it’s important to note that this is just a single data point, and further analysis and data will be needed to confirm the trend.
To summarize, the Small and Medium Enterprises (SMEs) closed out the year 2022 with reasonably strong revenue and employment data. This suggests that despite the ongoing economic challenges, such as concerns about economic conditions, inflation and energy costs, SMEs were able to maintain a stable level of revenue and employment.
This positive trend is likely due to various factors such as government stimulus, vaccinations and general improvements in the overall economic situation, which helped SMEs to regain some stability, despite challenges. The SME’s revenues have improved, and they were able to maintain their workforce, which could be a positive sign for the future.
As we enter 2023, the data indicates that SMEs are becoming slightly more optimistic about their future prospects. However, it’s important to note that this is just a single data point and that further analysis and data will be needed to confirm the trend.
The optimism also should be taken with a grain of salt, as the situation is still uncertain and depends on the pandemic’s development and the vaccine rollouts’ effectiveness, among other factors.
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