COVID-19 dampens business and consumer sentiment

As the COVID-19 restrictions continue to ease across the country, two separate measures of business sentiment and consumer confidence show the ongoing negative effects of the crisis.

Just 44 per cent of small to medium businesses are confident their numbers will rebound by October 2020, compared to 51 per cent in the previous two weeks, according to the latest COVID-19 SME Weekly Research Tracker, published by ACA Research and TEG Insights.

In the shorter term, nearly one-third of businesses expect revenues to increase over the next four weeks, which is an improvement from only 22 per cent in early May and includes the hard-hit hospitality and retail sectors. And support for the Federal Government’s response to the COVID-19 crisis has seen a decline to 65 per cent since its mid-May peak of 74 per cent. 

The COVID-19 Weekly Tracker was launched in April 2020 and consists of a minimum of 300 completed weekly surveys of financial decision makers and influencers at SMEs.

ACA Research managing director, James Organ, pointed to mixed messages from state and federal leaders which is creating high levels of uncertainty about SME leaders.

“As restrictions continue to be wound back, it is important for all governments to align to ensure business confidence is optimised,” he said. 

On the consumer side, many remain very concerned about economic shocks, according to the latest domestic Kantar COVID-19 Barometer survey, conducted between 23-28 April. While easing restrictions shows some signs of confidence, brands must address pricing and safety, according to the Kantar survey. 

Despite 46 per cent of households experiencing a fall in income during the last month, just 18 per cent expect it to be impacted in the future – a significant drop from 28 per cent a fortnight ago. While this lift in confidence is probably due seeing signs of life beyond lockdown and re-opening of more businesses, nonetheless 6 in 10 are expecting a slow recovery.

“This places the value on price as more important than ever,” said Kantar Australia head of retail and shopper, James Brown.

The crisis has also put a new focus on local sourcing and production, with two-thirds of those surveyed looking for a commitment to provenance and local manufacturing, according to Kantar.

“Supporting local business was always important, but greatly heightened during the bushfire crisis, which in turn has amplified a move towards local sustainability,” said Brown.

Ensuring the supply of products or services is now the biggest Australian consumer expectation of brands, after protecting employees and securing supply lines, he said.

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