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The elections are behind us but SMEs are still casting a vote of no confidence in the economy


We are through with the latest round of federal elections but if the latest research from accounting software provider MYOB is anything to go by, those who have been elected into power really have their work cut out for them, especially when it comes to the economy.

The August 2013 MYOB Business Monitor report, surveyed 1,022 SMEs a month before the election and found that the business performance outlook and economic confidence among SME owners has suffered quite a fall in the past six months.

Less than a quarter (23 per cent) expect our economy to improve within 12 months, down from 25 per cent in the March 2013 report. Only 35 per cent expect it to improve within one to two years, down from 37 per cent and in tandem, those who think it will take over two years to improve have increased from 22 per cent to 26 per cent.

This dip in economic confidence comes hand in hand with a dip in revenue expectations for this financial year. Only one in four (25 per cent) expect more revenue, down from 30 per cent just six months ago and 22 per cent are expecting a fall, up from 19 per cent.

Interestingly, this general sense of pessimism is persisting despite the majority of respondents overall reporting increased or stable revenue for the last financial year and over a quarter expecting to reel in more sales than usual in the short-term future.

How is this so? MYOB CEO Tim Reed says the financial confidence of our SMEs is closely linked to the health of our economy and it is telling us a clear story.

“SME owners see factors at play such as record-low interest rates and although many welcome the upside, they recognise it as a sure sign the domestic economy is experiencing slowed growth,” Mr Reed explains.

Mr Reed adds that we cannot rule out political uncertainty in the lead up to the election as strong factor behind this dip in confidence with “26 per cent of SMEs saying they didn’t trust any political party more than the other to appropriately manage the economy.”

This drop in confidence is particularly rampant within the agribusiness (agriculture, forestry and fishing) sector which at 13 per cent had the least confidence in the economy and the manufacturing sector which was the least positive about its revenue performance for this financial year, with 35 per cent of operators expecting a revenue fall.