Small businesses continue to rebound

The May results showed 47 per cent of businesses convey lower revenues than before the pandemic, but this is the lowest level reported since May 2021. Profit also continued to climb with 49 per cent of SMEs reporting a profit in May, compared to only 39 per cent in February.

However, SME decision-makers (48 per cent) do expect economic conditions to soften over the next three months, both globally and locally. In addition, the impact of supply chain issues continues to hinder business prospects with 55 per cent of SMEs impacted by delays and availability. This rises to 78 per cent in the construction industry.

Despite the numerous headwinds, investment intentions in people, marketing and equipment are expected to remain steady over the next three months. 

The demand for finance has increased slightly after three months of decline with 13 per cent of SMEs needing additional finance compared to 11 per cent in April. Finance for working capital and for funding growth have both spiked.

The proportion of SMEs with job vacancies also continues an upward trajectory rising from 23 per cent in January, to 29 per cent this month. However, 72 per cent of those with vacant positions believe recruiting is now more difficult than before the pandemic. This is the highest recorded since the inception of the research. Accordingly, there is an increasing demand from SMEs (54 per cent) for the government to increase skilled migration quotas, particularly among the hospitality sector (79 per cent).

On a positive note, staff mobility has increased with 56 per cent of SMEs that fly domestically for business resuming travel. The equivalent for international destinations is 25 per cent.

In summary, SME sentiment in May remained solid. Decision-makers are realistic about the difficult economic conditions but continue to invest in growth despite ongoing challenges with supply chains and people. With another jump in interest rates just announced sentiment could decline, but the uplift in mobility should be positive for many businesses including retail and hospitality.