Banking News

SME Confidence Remains Solid in Patchy National Picture – ScotPac

(10 July 2024 – Australia) Despite stubbornly high inflation and reduced consumer purchasing power, most Australian small and medium-sized enterprises (SMEs) remain optimistic about their short-term growth prospects according to new ScotPac SME Growth Index research.

ScotPac’s SME Growth Index Report is Australia’s longest-running sentiment check of SME attitudes towards growth. Commencing in March 2014, ScotPac’s twice yearly SME Growth Index is Australia’s longest-running research report on SME sentiment towards revenue growth prospects.

Key findings from the 10th-anniversary edition, based on direct interviews with 727 SMEs conducted by East & Partners, demonstrate the stark variations in confidence across the country, including

• 53 percent of SMEs are projecting revenue growth to September 2024 – down from 57 percent last year – compared with just a third (32 percent) flagging revenue decline.
• The average predicted growth rate of 8.8 percent is the highest ever recorded in the decade-long history of ScotPac’s SME Growth Index Report, surpassing the previous high of 8.6 percent recorded in the very first edition in 2014.
• There are clear signs of strain with the gap between high and low SME growth projections ballooning to a staggering 38 percentage points, and the average rate of predicted revenue contraction reaching a new high of -10 percent.
• Western Australian and Queensland SMEs remain the most positive in the nation, with 89 percent and 81 percent respectively forecasting six-month revenue growth.
• Victorian SMEs are the nation’s most pessimistic with just 14 percent projecting revenue growth compared with 65 percent flagging a decline in fortunes.
• NSW SMEs occupied the cautious middle ground with 43 percent predicting revenue growth, 27 percent forecasting revenue decline, and 30 percent anticipating no change.

“The fact that most SMEs remain optimistic in a challenging economic climate is a great indicator of the agility of Australian business owners who continue to adapt and thrive. The growing chasm in SME revenue projections paints a vivid picture that confirms Australia’s post-COVID, two-speed economy is alive and well” commented ScotPac CEO, Jon Sutton.

“A lot of businesses we work with are investing in new equipment or technology in fast-growing sectors like health and aged care, eCommerce and renewable energy.

“However, other sectors like construction, restaurants & cafes and shopfront retail face ongoing challenges with issues including material costs, supply chain disruptions and cost of living rises that are squeezing discretionary spending.

“Whatever the situation, SMEs should talk to their brokers and advisers regularly about the growing range of working capital options available to support their specific needs, however simple or complex,” Mr Sutton said.

SME Business Confidence Across the Years – 2014-2024

• Growth projections peaked at 63 percent in 2014 and hit a low of 47 percent at the outset of COVID in 2020.
• Negative revenue forecasts peaked at 32 percent in this report (2024) and were lowest at just 13 percent in 2014.
• The gap between the most positive and most negative growth projections reached a peak of 38 percentage points in this report (2024) compared with a low of 18 percentage points in 2014.