In this survey, around 2,000 firms were surveyed by the ABS between the 15-23 July with a response rate of 50%. The impact of the pandemic on firms' revenue continued to be significant into July with 47% of businesses reporting a decrease over the month. This follows on from the finding in the June survey that 66% of firms had seen revenue fall compared to a year ago. Revenue was reported as being flat through July by 32% of firms, while 16% noted an increase. In looking ahead to August, 49% of firms expected a stabilisation in revenues to emerge, though 27% expected that revenues would be lower again.
Source: ABS
Notably, businesses operating under modified conditions in order to comply with restrictions were around three times more likely to be forecasting revenues to decline next month compared to those firms operating under 'normal' conditions. The previous survey reported that 73% of firms were now operating under modified conditions, with the introduction of hygiene protocols and limitations on the number of people on site the most prevalent changes that have been implemented.
Source: ABS
On support measures, 42% of firms reported that they were currently accessing some of the available schemes including the JobKeeper policy, cash flow assistance, loan deferrals and rent/lease renegotiations. Some 54% of firms were benefitting from the Federal Government's 'Boosting Cash Flow for Employers' policy, which is effectively a refund of tax withheld ranging between $20,000-$100,000. This support was predominantly being used to pay wages (61%) and meet fixed costs such as rent (56%). The ABS compiled the figure (below) to highlight the areas in which industries were making use of this cash flow assistance.
Source: ABS
However, with these support measures being temporary, attention turns to how businesses might respond when those programs are wound up. The table, below, highlights some concerning outcomes with 16% of firms identifying that they would need to either cut or defer capital expenditure plans, while 13% said they would look to reduce the size of their workforce. These outcomes were expected to be more pronounced in medium-size businesses (20-199 employees) than in small (0-19 employees) and large (200 or more employees) firms. In addition, 10% of firms said they would cease operating, with this mainly being a small business story.
Source: ABS
An analysis of the specific actions various industries might be expected to take when support measures come to an end is summarised in the figure, below.
Source: ABS
The July survey highlights that business conditions for Australian firms remain extremely challenging with the onset of the pandemic, as well as ongoing measures to comply with restrictions, significantly impacting revenues. Broad-based support measures are reaching many of these impacted firms, but unless more support is forthcoming when those programs expire, some painful adjustments could lie ahead through lower business investment and more layoffs.
