Small businesses still planning to grow despite economic headwinds

The latest wave of the ACA Research SME Sentiment Tracker found that although SME revenues were down slightly in January after the Christmas spending in December, they were much stronger than they were in January 2022.

In fact, 53 per cent of small businesses said they recorded a profit in December last year.

In addition, the latest report found that concerns over staff shortages and supply chain issues have also declined.

However, there was rising concern about the national and international economy with 58 per cent of those surveyed saying they expect the Australian economy to weaken over the next three months while 63 per cent are predicting weaker conditions on the global front. 

After a busy December, January vacancies were lower with 24 per cent of SMEs revealing they had vacant roles compared to 28 per cent a month earlier.

As the job market showed signs of softening, the report found that only 16 per cent of SMEs are expecting to hire new employees in the next three months, down from 22 per cent in September 2022.

Investment intentions continued to fluctuate by category, but IT spending looked strong with 52 per cent expecting to invest over the next three months — the highest level reported since May 2021. However, the demand for finance dropped significantly to 9 per cent (from 15 per cent in December) as interest rates continue to increase. 

The report stated many SMEs have started 2023 with optimism following a strong finish to 2022, but many expect to take a more cautious approach over the next three months as they assess the impact of rising interest rates on consumer confidence and spending.