How are small businesses doing?
In a June Small Business Climate Index (SBCi), the overall assessment of the business environment showed that the business climate for SMMEs is better but tentative.
Some of the issues affecting the survival of small businesses are supply and the cost of municipal services, which are becoming a growing problem. The delay in Covid 19 vaccination also has economic and business consequences. With credit no longer as readily available, the financial environment is becoming tighter. Worrying inflation process sets in as consumer inflation exceeds 5% – producer inflation 7.4%
When comparing pre-Covid economic activity to current activity, confidence is still negative. The “normalisation” of the economy is dependent on the success of the vaccination process. The impact of this week’s turmoil has not yet been quantified in the SBCi contacts, but the warning lights are flickering.
Specific observations in June were that there was a short-term setback from the third wave of Covid 19 and Level 4 lockdown. This slowed the improvement in business confidence but remained above the depressed June 2020 level of 76.5. Retail sales volume was below pre-Covid levels. Household disposable and discretionary income is under pressure. Tourism’s slow recovery was halted by the setback of the third Covid wave. Cost pressures – especially in fuel, water and electricity tariffs – are fuelling inflation fears. The severe problem of unemployment has become structural.
We need to remain calm and focused and not make rash decisions until the current unrest situation normalises.