We review the new ABS report on what business conditions are like in 2022
On 11 February 2022 the Australian Bureau of Statistics (ABS) released an illuminating report on ‘Business Conditions and Sentiments’, with a particular focus on how small businesses are faring in early 2022.
Based on data gathered through phone interviews from 27 January to 4 February 2022, the report is an enlightening snapshot of the current outlook and challenges facing Australian businesses.
The data was collected from 1100 participating Australian businesses, selected from a random sampling of ABN’s.
- 22% of all surveyed businesses have staff on leave due to COVID-19.
- 36% of small businesses are ‘greatly affected’ by supply chain issues – disproportionate as compared to medium and large businesses.
Small businesses hit hardest
In a seeming trend, it’s small businesses who are facing the brunt of the business challenges across the country.
With less resources, lower investment capital, and fewer staff, small businesses are particularly vulnerable.
Not only were small businesses more likely to be severely impacted by supply chain issues, they were also more vulnerable to staff shortages and had less cash on hand than larger businesses.
When data from January 2022 is compared with similar data collected in January 2021, it’s clear that business revenue, on average, has taken a significant hit.
- January 2022: 41% of businesses reported decreased revenue.
- January 2021: 31% of businesses reported decreased revenue.
This average decline in revenue is coupled with a lower incidence of increased revenue.
- January 2021: 20% of businesses reported increased revenue.
- January 2022: 11% of businesses reported increased revenue.
Supply chain issues persist
As we reported on recently, supply chain issues are persisting, with reverberations of the Omicron driven disruption continuing to ripple around the country.
We can also see that small businesses (as compared to medium and large businesses) are most likely to be experiencing the strain of supply disruptions.
There are also clear sectors and business types which are disproportionally affected, with Wholesale trade (75%), Retail trade (71%) and Manufacturing (65%) the hardest hit.
According to the data,
“Nearly half (47%) of all businesses are currently experiencing supply chain disruptions, an increase compared to April 2021 (30%).”
It is also clear that the pain was not equally shared among all businesses. We can see that,
- 36% were affected to a great extent (e.g. major delays / cannot obtain certain items and significant impact on revenue);
- 61% were affected to a small extent (e.g. some delays but little impact on revenue)
- 2% were not affected at all.
There is positive news however in the resilience of businesses when it comes to altering their supply processes. The ABS noted that:
“Most of these businesses (86%) had made at least one modification in January 2022.”
These modifications came in the form of changing their ordering process, using alternate suppliers, and increasing the cost of their goods and services.
Staff shortages continue
Staff shortages continue to be a disruptive element in the business landscape. Staff shortages are seen as a contributing factor in not only decreases in revenue but also supply chain issues.
This is also the first time the ABS surveyed businesses on whether they had staff away due to a COVID-19 infection. They found that,
“Just over one in five (22%) of all employing businesses reported that employees were unavailable due to COVID-19”.
It’s worth noting though, that staff shortages are possibly not as bad as first perceived.
“In January 2022, 18% of employing businesses did not have enough employees based on current operations, compared to 19% in June 2021 and 12% in March 2021.”
If you’d like to drill down on this information even further, please see the full ABS report here.