Business Conditions and Sentiments

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Insights into Australian business conditions and sentiments.

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Reference period
February 2021
Released
26/02/2021
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Key statistics

  • Two in five (41%) businesses were significantly impacted by COVID-19 restrictions in February. This compares to 53% in April 2020.
  • In February, 41% of businesses reported that cash on hand could cover less than three months of business operations.

  • 14% of businesses had sought additional funds over the last three months.

The February release of Business Conditions and Sentiments includes data on changes in revenue, operating expenses and number of employees in January and February. This publication was previously named Business Indicators, Business Impacts of COVID-19.

In responding to the survey, businesses are asked to provide a best estimate only, without accessing records or reports.

The survey was conducted through a telephone based survey between 10 February and 17 February. Victoria and Western Australia were affected by government imposed restrictions during this collection period:

  • Western Australia had lifted most of the government imposed restrictions by 5 February, but some rules such as mask wearing and travel restrictions were maintained until 12:01am on 14 February.
  • Victoria announced on 12 February that stage 4 government imposed restrictions would take effect from 11:59pm.

Business size categories used in this release:

  • Small (0-19 persons employed);
  • Medium (20-199 persons employed); and
  • Large (200 or more persons employed).

For information on survey sample, response rates and the questionnaire, see Methodology.

Factors significantly impacting businesses

Factors significantly impacting businesses
Factors impacting businesses in February: COVID-19 restrictions (41%), reduced cash flow (30%), reduced demand (28%), supply chain uncertainty (28%), changes to government support (22%), staff shortages (13%), reduced access to additional funds (12%)

Two in five (41%) businesses were significantly impacted by COVID-19 restrictions in February. This compares to about half (53%) of businesses in April 2020, when they were last asked about these impacts.

Businesses commented on the COVID-19 restrictions that were impacting them. They included:

  • border restrictions and closures (both international and domestic) limiting both business operations and ability to source staff;
  • capacity limits; and
  • increased cleaning requirements.

The second most common factor significantly impacting businesses in February was reduced cash flow (30%). This has halved since April 2020 (72%). The proportion of businesses reporting reduced demand has also halved since April (28% compared to 69%).

(a) Proportions are of all businesses

(b) In April 2020, businesses were asked about how they expected COVID-19 to adversely impact them over the next two months

(c) Not included as a response option in April 2020

(a) Proportions are of all businesses

Factors significantly impacting businesses, top industries (a)(b)

Factors impacting businesses by top industries
Factors impacting businesses by top industries: - COVID-19 restrictions: accommodation and food services (80%), arts and recreation services (70%), administrative and support services (69%); - reduced cash flow: arts and recreation services (53%), manufacturing (44%), administrative and support services (43%); - reduced demand: administrative and support services (59%), information media and telecommunications (41%), retail trade (38%); - supply chain uncertainty: wholesale trade (62%), manufacturing (61%), information media and telecommunications (41%); - changes to government support measures: manufacturing (46%), information media and telecommunications (41%), arts and recreation services (39%); - staff shortages: other services (23%), arts and recreation services (21%), health care and social assistance (21%); - reduced access to additional funds: arts and recreation (23%), administrative and support services (20%), information media and telecommunications (19%)

Revenue, employees and expenses

Businesses reported on changes in revenue, number of employees and operating expenses over the last month and expected changes over the next month. This information has been collected each month since July 2020.

 

Changes in revenue

Between December and February, the proportion of businesses reporting increased revenue has fallen each month (25%, 20% and 17%).

A number of businesses commented that scheduled closures in early 2021 and seasonal factors had contributed to weakening revenue.

 

(a) Proportions are of all businesses

(b) Businesses were asked to report changes over the last month

Revenue expectations for February, reported in January, showed the proportion of businesses expecting a decrease halving (13% compared to 27% expected for January) and a larger proportion expecting an increase (27% compared to 22%).

(a) Proportions are of all businesses

(b) Expectations for the indicated month as reported by businesses in the previous month of collection

Changes in number of employees

Eight per cent of businesses increased their number of employees in February, consistent with December (11%) and January (10%).

In February, medium businesses were more than three times as likely as small businesses to report an increase in the number of employees (26% compared to 7%). This pattern is consistent across December and January.

(a) Proportions are of all businesses

(b) Businesses were asked to report changes over the last month

Changes in operating expenses

One in five (22%) businesses reported an increase in operating expenses in February, consistent with January.

Medium businesses were more likely than small and large businesses to report an increase in operating expenses in December, January and February.

(a) Proportions are of all businesses

(b) Businesses were asked to report changes over the last month

Cash on hand

Businesses were asked to describe the availability of cash on hand based on the business’s current level of revenue and expenditure.

Cash on hand includes savings, assets that can easily be sold, and unused credit facilities. The objective of this question is to capture business perceptions of financial resilience based on conditions experienced at the time of collection. 

In February, two in five (41%) businesses reported their cash on hand could cover less than three months of business operations. This compares to 29% of businesses in October and June.

(a) Proportions are of all businesses

In February, small and medium businesses (42% and 40%) were more likely to have less than three months of cash on hand available, compared with large businesses (24%). Large businesses were the most likely to report having six months or more cash in hand available; 39%, compared to 27% of medium businesses and 24% of small businesses.

(a) Proportions are of all businesses

Funds sought by businesses

One in seven businesses (14%) sought additional funds over the past three months.

Businesses in Mining (31%) and Arts and recreation services (29%) were the most likely to have sought additional funds.

(a) Proportions are of all businesses

 

Whether businesses were successful in obtaining funds

Businesses that sought additional funds also reported whether they were successful in obtaining those funds.

Almost one in five small businesses (18%) that had sought additional funds reported they had not been successful in obtaining the funds.

Outcome of funding sought by businesses, by employment size (a)(b)
 Small businessesMedium businessesLarge businessesAll businesses
 %%%%
Business was successful in obtaining funds61808662
Funding application still in progress15102115
Business was not successful in obtaining funds186117
Don't know5635

(a) Proportions are of businesses that sought additional funds in the last three months
(b) Businesses could provide more than one response

Reasons for not seeking additional funds

More than four in five (83%) businesses did not seek additional funds over the past three months. These businesses reported on reasons for not seeking funds.

(a) Proportions are of businesses that did not seek additional funds

(b) Businesses could provide more than one response

Capital expenditure

Businesses reported on whether they usually have capital expenditure at this time of year, capital expenditure plans they have for the next three months and factors influencing future capital expenditure plans.

Capital expenditure refers to acquisition of new or used assets e.g. vehicles, machinery and equipment, buildings and other structures.

Planned capital expenditure compared to what is usual for this time of year

Businesses that reported they had planned capital expenditure over the next three months provided information about whether the planned expenditure was higher, the same or lower than what is usual for this time of year. 

Of the 23% of businesses that had capital expenditure plans over the next three months, four in five (80%) expect to spend the same or more than what is usual for this time of year.

Businesses with capital expenditure plans over the next three months
Businesses with capital expenditure plans over the next three months: yes (23%), no (63%) or don't know (14%). Of those businesses with capital expenditure plans: higher than usual for this time of year (52%), the same as usual (28%), lower than usual (10%) or unsure how plans compare to usual (10%).

Capital expenditure plans over the next three months, by employment size

Capital expenditure plans over the next three months, by employment size
Proportion of small businesses with capital expenditure plans: small business (22%), medium businesses (36%) and large businesses (57%). Of small businesses with plans: these plans are higher than usual for this time of year (53%), same as usual (27%), lower than usual (10%) or unsure how they compare (10%). Of medium businesses with plans: these plans are higher than usual for this time of year (50%), same as usual (35%), lower than usual (4%) or unsure how they compare (11%). Of large businesses with plans: these plans are higher than usual for this time of year (21%), same as usual (56%), lower than usual (12%) or unsure how they compare (11%).

Factors influencing future capital expenditure plans

Businesses indicated which factors had significantly influenced their planned capital expenditure for the next three months. Businesses were also asked this question in November 2020.

For all businesses, the most common factors influencing capital expenditure plans were uncertainty around COVID-19 restrictions (30%) and uncertainty about the future state of the economy (28%).

Factors influencing future capital expenditure plans (a)(b)

Factors influencing future capital expenditure plans
Factors influencing future capital expenditure plans: - uncertainty around COVID-19 restrictions (30%); - future economic uncertainty (28%); - demand for products and services (21%); - access to own funds (19%); - supply chain disruptions (14%); - other government support (e.g. Coronavirus SME Guarantee Scheme) (11%); - tax incentives for investment (e.g. Temporary full expensing, Loss carry back regime, Backing business investment - accelerated depreciation) (11%); - access to external finance (10%).

For those businesses with planned capital expenditure, the most common factor influencing expenditure plans was demand for products or services (49% in November 2020 and February 2021).

(a) Proportions are of businesses with capital expenditure plans

(b) Not provided as a response option in November

Data downloads

Data downloads

Data files

Previous catalogue number

This release previously used catalogue number 5676.0.55.003

Methodology

Business Conditions and Sentiments methodology, February 2021

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