VIC businesses showing optimism for recovery

- September 21, 2020 3 MIN READ

As Melbourne edges closer to coming out of lockdown, new data from Sensis has revealed signs of optimism from the state’s small business community.

When it comes to the future of small business, Melbourne small businesses are twice as optimistic as they were a month ago. According to the September Sensis Business Index, 35 per cent of Melbourne small businesses believe the Victorian economy will be better in a year compared with 17 per cent when they were asked the same question last month.

Small business optimism improves despite lockdown

Sensis CEO John Allan said he was surprised at the optimism.

“Melburnians have been in lockdown for more than 80 days which is longer than the 77 days in Wuhan. But despite that they still have belief in both the Victorian and Federal economies bouncing back.”

On a national front, Allan said economic optimism had changed little in the last month. However, every state was more positive except Hobart. Yet when reflecting on the economic outlook for 2021, 56 per cent of Australian small businesses say the national economy will be worse in a year than what it currently is. Canberra small businesses were the most pessimistic at 66 per cent followed by Melbourne at 62 per cent and Adelaide at 60 per cent. Perth was the most positive at 50 per cent.

Economic forecast swings between optimism and pessimism

Sydney small businesses were not as pessimistic as Melbourne with 49 per cent saying it will be worse with 22 per cent saying it would be better. Perth was the least pessimistic with just 27 per cent saying the WA economy would be worse against the national average of 45 per cent.

Industry-wise, 71 per cent of health-related businesses said the economy would be worse – by far the highest figure. Hospitality and Retail were both at 53 per cent.

The Hospitality sector was expecting to jump back with 30% saying the economy in one year would be better – the highest of any sector.

JobKeeper continues to prop up businesses

The Federal Government’s JobKeeper scheme continues to allow small business owners to remain in operation with 44 per cent claiming they would not have survived without it.

“A lot of industry experts were saying that perhaps JobKeeper should have been tiered. As you can see some sectors are less affected and a business down 30% is probably going to survive but a business like those in the travel sector who are down 100% probably won’t and the closures show that,” Allan said.

Allan said the research showed each state was affected differently and it also depended on what sector a business was in.

“The overall impact was 44 per cent nationally, but when looking at it from a state perspective, JobKeeper was way more important in Melbourne – at 62 per cent – compared to Hobart, which was nearly half of that at 33 per cent,” Allan said.

“When you look at it from an industry perspective, Hospitality was at 65 per cent, Retail at 42 per cent but Construction was only at 30 per cent.”

47 per cent of business owners suggest JobKeeper remains critical to their survival. Again, Melburnians were the most in need.

“The biggest difference was comparing Melbourne to Sydney with a massive 78 per cent of Melbourne small businesses saying it was critical but just 31 per cent in Sydney. That is a vastly different outlook,” Mr Allan said.

Border closures continue to impact small business

The survey also looked at the impact on businesses of the border closures. 40 per cent of small businesses said border closures were having no effect on their business, 40 per cent said somewhat and 20 per cent said it as having a major impact.

Adelaide business owners saw the least impact with 53 per cent (the highest) saying border closures had no impact and 11 per cent (the lowest) saying a major impact. Contrast that with 28 per cent of Melbourne businesses saying it had a major impact with 24 per cent saying it had no impact. Sydney businesses were also being affected with 26 per cent (just behind Melbourne) saying the border closures were having a major impact.

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