It has been revealed by CreditorWatch that some of Australia’s economic recovery has slightly lost a bit of its momentum, as it has recorded a 9 percent increase in credit defaults across businesses.
Recently released figures show that despite the fact that although credit defaults were 43 per cent lower for the three months to May, compared with the same period last year, they had grown by 9 per cent on the prior quarter. May had seen a 9.8 per cent increase in payment defaults on April.
The number of external administrations also rose by 24 percent from the quarter before, although they were down by 6.5 per cent compared with the May quarter of 2020.
However, credit enquires were trending upwards, having risen on an annual basis for eight months straight. In the three months to May, the number of enquiries was 39 per cent higher than the prior quarter and 52 percent higher than the previous year.
CreditorWatch has called the results of the research a mixed bag, with annual improvements contrasting against more recent developments.
CreditorWatch contends that the data could indicate that small and medium-sized enterprises may be starting to struggle more in a post-JobKeeper environment. The report has also noted a 0.3 per cent slip in company profits following the end of covid-19 stimulus measures.
Since April 2020, defaults have remained 50 percent lower than pre-covid figures, this is mostly due to government stimulus support. The report noted the focus will now be on the next steps to recover the numbers to pre-pandemic levels, with the June and September quarters to reveal the true post-stimulus conditions.
However, the RBA’s statement for its June monetary policy decision illustrates that the bank is expecting 4.75 percent growth this year, followed by a drop in 2022 to 3.5 percent GDP growth. Unemployment is also expected to fall to 5 per cent at the end of the year, from its current 5.5 percent.
New research released by Xero in May 2021 illustrates that Australia was one of the fastest recovering economies in the world during the second half of 2020. It has been revealed that only 210,000 more jobs need to be created across Australia’s small business sector by the end of this year to drive a full economic recovery from the covid-19 pandemic.
The report which is called “The Job Ahead: Small business and the global economic recovery” sampled its data from approximately 300,000 customer records. These records were supplied by labour force data which was collected by the Australian Bureau of Statistics (ABS). The data found that younger staff, women and casuals were more heavily impacted by job losses in the small business sector.
Findings from the report also concluded that small businesses who paid their staff higher wages throughout 2020 experienced fewer job losses. It was reported that in May 2020, higher-paying companies saw employment decrease by 13.5 percent, in comparison lower-paying companies experienced a drop of 22.3 percent.
Businesses that opted for higher rates of digitalisation within their organisation, also saw a smaller number of employment declines, at 14.8 percent, in comparison organisations that were slow to adapt digitally experienced an employment fall of 18.4 percent.
It was also revealed that a combined number of 2.9 million small business jobs need to be created across Australia, New Zealand, the United Kingdom, Canada and the USA to ease the post-pandemic economic shock.
Australia only needs to create another 210,000 jobs, Canada 220,000, New Zealand 40,000, the United Kingdom 410,000 and the US 2 million more new jobs to reach a full recovery in the small business sector.
Although Australia was one of the fastest-recovering economies in the second half of 2020, the impact of the covid-19 pandemic on jobs will continue to be felt for some time going into the future.
The required 210,000 additional small business jobs needed to support our economic rebuild accumulate over twice as many small business jobs as are normally created in a single year.
In Australia, around 45 percent of private sector employees are in a business with less than 20 employees.
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