More than half of the businesses in Melbourne surveyed in the August Sensis Business Index say they will see a decrease in profitability over the next three months.
The survey was conducted just as Melbourne went into Lockdown 2.0 and it showed with 54% of businesses saying their profitability will decrease. Compare that to Sydney which had just 27% of businesses believe their profitability will decrease over the same period.
In fact, nearly one in three Sydney businesses (29%) said they expected to increase their income compared to just 18% of Melbourne businesses.
Across the 1,000 businesses surveyed, 34% expected to see a decrease, 40% no change and 22% an increase.
At 29% Sydney businesses were the most optimistic about increasing their profitability followed by Canberra at 27%, Adelaide 25%, Hobart, Brisbane and Perth all at 20% and Melbourne at 18%.
The survey was conducted across 10 business categories. The most optimistic were the Wholesale and Manufacturing sectors with 31% believing they would be more profitable over the next three months. The least optimistic were the Transport/Storage and Cultural and Recreational Services both at 13%.
Sensis CEO John Allan
Sensis CEO John Allan said the survey showed just how hard some industries had been affected. “There are some sectors that were less affected, but the hospitality and accommodation sectors were virtually shut overnight,” he said. “And that continues to be the case in Victoria.
“Of all the businesses we surveyed nearly half (49%) of those in hospitality and accommodation said Covid-19 had had a severe impact on their business. That was easily the highest figure of the 10 sectors we surveyed. To put that number in perspective, the Construction sector figure was 22%, Health and Community Services at 19% and Wholesale at 15%.
“When looking at their sales figures impacted by Covid-19, 60% of the hospitality and accommodation sector said sales had reduced significantly. In comparison, the Health and Community Services sector was at 24%.
“The sector also laid off the most staff – 35% – with Transport the next highest at 26%.”
Mr Allan said what had not helped the hospitality and accommodation sector was that it had been difficult to get finance. “43% said it was more difficult to get finance. That was well ahead of any other sector with the industry average at 36%. One in three (33%) said they were knocked back for finance compared to the industry average of 26%.”
And for the next 12 months
Melbourne and Canberra businesses are the most worried about their business prospects in the next 12 months.
39% of Canberra businesses are either Fairly Worried or Extremely Worried whilst it is 38% in Melbourne. Perth (12%) and Canberra (12%) were the most Extremely Worried. Brisbane was the most optimistic with 49% of businesses either Extremely Confident or Fairly Confident for the next 12 months. Brisbane was followed by Hobart (44%) and Sydney (43%).
Cultural and Recreational and Other Services was the most worried of all sectors with 46% saying they were Fairly Worried or Extremely Worried about the next 12 months. Accommodation/Cafes/Restaurants was next at 38% and Retail at 35%.
The Construction and Building sector was the most confident with 47% either Extremely or Fairly Confident of the next 12 months ahead of Transport/Storage (46%), and Wholesale and Finance and Insurance both at 45%.
13% of Melbourne businesses surveyed said they will close their doors sometime in the next 12 months. This was just ahead of Perth with 12% followed by Brisbane and Sydney at 7%. Metropolitan businesses are nearly twice as likely to close over the next year with 5% of Regional businesses saying they will close compared to 9% in Metropolitan areas.
Transport/Storage believes it will be the hardest hit sector with 13% of businesses saying they will close over the next year followed by Cultural and Recreational and Other Services at 12%. Interestingly only 6% of Accommodation/Cafes/Restaurants intended to close.
One of the most disturbing findings was that 56% of Melbourne businesses said they had seen a significant reduction in sales against a national average of 44%. Just 39% of Sydney businesses and 23% of Hobart businesses said they had been significantly impacted.
Laid off staff during COVID
Applied for but didn’t get
Didn’t apply for JobKeeper
JobKeeper for SMBs
One surprising fact from the survey was that SMBs who applied for and received JobKeeper were more likely to have laid off staff than those who didn’t apply or applied but didn’t receive JobKeeper. 40% of SMBs applied for JobKeeper of which 90% were successful.
Views on the economy
The national economy was viewed as performing worse than the individual state economies.
On a national level, 64% of businesses believe the economy will be worse in 12 months with 23% believe it will be the same and 13% believe it will be better.
When asked the same question about their state’s economy, businesses were slightly more positive with 57% saying it would be worse, 27% the same and 16% better
On a national level, Canberra businesses were the most pessimistic with just 7% saying the economy will be better, 20% the same and 73% worse. 66% of Melburnians believe it will be worse and 58% of Sydneysiders.
On a state level, Hobart businesses were the most positive at 22% followed by Sydney at 19%, Melbourne and Perth at 17%, Brisbane at 15%, Adelaide at 12% and Canberra at 7%.
Melburnians were the least optimistic with 65% saying the state economy would be worse, Canberra at 63%, Adelaide 59%, Brisbane and Sydney 56%, Hobart 50% and Perth 43%.
On a national level, the Cultural and Recreational and Other Services sector was the most pessimistic with 74% saying the economy would be in worse shape in 12 months. The most optimistic sector was Transport/Storage but that was still at 56%.