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, without a playbook to refer to on how to deal with a pandemic, it appears South Australia has so far 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 surveyed 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 more permanent mass migration.
Again, we saw in the June quarter COVID-19 push business growth aspirations on the back burner with only 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.