SA businesses see glimmer of hope, as confidence returns
While the perils of this pandemic continued to swirl around them in states like Victoria and overseas, South Australian business owners were surprisingly feeling somewhat confident about the road ahead.
SA Business
Don't miss out on the headlines from SA Business. Followed categories will be added to My News.
- Seeley International confident of more growth
- How to get the most out of your Advertiser subscription
The tide of business confidence in South Australia has turned but the swell of success is still a long way off.
After falling to catastrophic levels never before seen in the March quarter, business confidence rebounded in the June quarter Business SA – William Buck Survey of Business Expectations.
From a historic rock bottom 41 points, business owners defied ongoing uncertainty from COVID-19 to record a 26-point jump in confidence to 67.0. The spike in confidence cannot be understated, it is the largest in 13 years.
While the perils of this pandemic continued to swirl around them in states like Victoria and overseas, South Australian business owners were surprisingly feeling somewhat confident about the road ahead.
The General Business Conditions Index for the June quarter stabilised, despite businesses predicting it would plummet further back in March. The outlook for next quarter fared even better, with the index expected to jump almost 14 points to back above 80.
Revenue also started to swing with those businesses down by 50 per cent or more in the June quarter (22 per cent) halving from the March quarter figures (43 per cent).
While the full impact of the deadly second wave in Victoria had not fully emerged at the time of the survey period in early to mid-July, it is still clear businesses owners are feeling more confident of surviving current restrictions in SA.
Amid mass uncertainty in March, 36 per cent of businesses cast doubt on whether they could survive another three months, however, June is much more encouraging with 81 per cent of SMEs now confident of surviving current restrictions for a further six months or longer.
There is no doubt the Federal Government’s JobKeeper scheme is boosting confidence.
According to the survey, 65 per cent of respondents are receiving the wage subsidy while 60.2 per cent of those on the scheme said it had allowed them to maintain pre-COVID-19 staffing levels, which underscores the critical importance for it to continue.
More so for businesses reliant on events and international tourism.
The survey found 94 per cent of tourism businesses are on JobKeeper – the highest percentage of any industry.
That is why Business SA is urging the state and federal governments to consider additional financial support measures above and beyond JobKeeper 2.0 for those businesses that remain materially impacted by restrictions on gatherings and events as well as international travel.
While there is a glimmer of hope on the horizon for SA’s broader economy, for some businesses, the future still remains dark.
Martin Haese is chief executive of Business SA.
A divided economy
Jamie McKeough
Business confidence and conditions have bounced back in the June quarter and the depths of despair anticipated back in March, fortunately, have not materialised.
While this is a good thing, it is clear COVID-19 has divided South Australia’s economy.
On the one hand, we have around 35 per cent of businesses reporting the same, minimal impact or slight increase to revenue for the quarter but on the flip side, 22 per cent of businesses are still in a world of pain reporting revenue down by more than 50 per cent.
While it is pleasing the majority of South Australian businesses fall into the minimal impact category, it is clear a group of businesses continue to suffer significantly from COVID-19, which is having a huge impact on their bottom line.
At the time of the survey, two thirds of businesses responded that their business had suffered from COVID-19 restrictions such as social distancing and interstate or international border restrictions, with 40 per cent to a moderate to great extent.
But, after some confusion, it appears South Australia has since got the balancing act right between juggling the health response and economic recovery from this pandemic.
This can be seen in the mass uncertainty at the time of the last survey in March that saw 36 per cent of businesses cast doubt on whether they could survive a further three months under COVID-19 restrictions.
The June quarter is much more encouraging with 81 per cent of SMEs confident their business can now survive for six months or more under current restrictions.
The Federal Government’s JobKeeper scheme has also undoubtedly contributed to healthier than expected business confidence.
With 65 per cent of businesses on JobKeeper, you’d hate to imagine what the picture would be without the wage subsidy in place.
The financial impact would be dire and the flow onto unemployment would be catastrophic.
Thankfully, the Federal Government has since announced an extension to the scheme for those that need it most to until 28 March 2021, allaying fears and restoring confidence to businesses.
Interestingly, it appears working from home will be the exception not the norm moving forward with 46 per cent of SMEs bringing their staff back into the office while the majority also reported that work from home arrangements would continue however, on an ad hoc basis rather than a mass migration.
Again, we saw in the June quarter COVID-19 push business growth aspirations on the back burner with 35 per cent feeling the need to revise or update their 3-5-year business strategies to cope with the crisis.
In all, the June numbers are still grim but in the current climate, a glimmer of hope is better than nothing at all.
Jamie McKeough is managing director SA of William Buck.