SME revenues remain positive despite growing inflation concerns

The latest SME Sentiment Tracker, compiled by ACA Research, reveals that SMEs have experienced yet another month of stable revenue, with revenue expectations continue an upward trajectory with 35 per cent expecting an increase over the next four weeks.

In line with positive revenue data, growth expectations for the next 12 months have again increased, the research has found, especially amongst the distribution and hospitality sectors.

It also noted that the revenue figures show no indications that economic uncertainty is impacting turnover despite the fact that 62 per cent expect global conditions to weaken, while expectations about the Australian economy are only slightly higher at 58 per cent.

The tracker also reflects concerns about escalating operating costs, with concern about inflation and rising interest rates jumping to 81 per cent in October from 72 per cent in September. In addition, 22 per cent reported an operating loss in October, compared to 17 per cent in September, suggesting higher costs are starting to hurt margins.

Another concerning data in the report is a sharp drop in vacant job roles, with only 24 per cent of SMEs recruiting, compared to 30 per cent in September and 35 per cent in July.

With fewer SMEs looking to fill roles, the ease of recruiting has improved substantially over the past month with 43 per cent finding it difficult to recruit compared to 57 per cent a month earlier.

“SME financial indicators remain positive, but weaker confidence about local and global economic conditions continue to point to difficult times ahead,” ACA Research Managing Director, James Organ, said. “Heightened concerns about inflation and softer jobs data is a likely indication that SMEs are beginning to plan for some tough conditions over the next few months.”

The SME Sentiment Tracker is prepared in partnership with Ovation in tracking business sentiment across more than 400 small and medium enterprises each month.