SME sentiment remains weak

The research indicated that 22 per cent of SMEs are reducing spend on capital equipment and marketing over the next three months.

The latest wave of the SME Sentiment Tracker showed a decline in all financial indicators, with confidence regarding economic conditions both locally and globally remaining very weak.

SME confidence showed signs of weakening across all key performance indicators including revenue, profit, and growth, suggesting the impact of rising interest rates is beginning to slow consumer spending.

Only 17 per cent of SMEs are now trading at higher revenues than prior to the pandemic, compared to 22 per cent last month. On top of those figures, the survey revealed that 21 per cent of SMEs operated at a loss in November compared to only 15 per cent in June.

Short-term revenue expectations have also declined with those expecting revenues to fall climbing to 12 per cent from just 6 per cent in October. As uncertainty increases, growth expectations for the next 12 months continued to fluctuate, with only 36 per cent confident of growth compared to 41 per cent a month earlier.

A majority (84 per cent) of SMEs are concerned about fuel prices, 81 per cent about inflation and rising interest rates, and 79 per cent about energy costs.

In line with other financial data, employment numbers are also slightly down overall, despite 29 per cent of SMEs currently looking to fill roles. The hospitality sector is particularly active with 65 per cent still looking for staff to manage the busy Christmas period.

In summary, SME financial indicators all declined in November and confidence regarding economic conditions both locally and globally remains very weak. While supply chain issues appear to be dissipating, inflationary pressures continued to impact operating costs and hence investment in people, capital equipment, and marketing are all trending down.