Creditorwatch, one of Australia’s leading data experts on SME insolvencies, has declared that December 2021 saw a 45% drop in trade compared to the previous year as a result of the Omicron wave of the pandemic.
While some areas held up well – notably Perth and Newcastle – others suffered massively, with Melbourne doing the worst of major Australian cities.
The monthly Business Risk Index, published yesterday, showed how SMEs were doing it tough through lack of staff, lack of footfall and supply chain issues – all related to isolation rules and Covid.
“The Australian economy undoubtedly bounced back in the December 2021 quarter and carries some momentum into 2022 but is enduring a bumpy ride as Omicron bites,” read the report.
“With such high vaccination rates we will push through, but many SMEs have been hit hard. The promise of a relatively strong start to 2022 for areas such as retail and wholesale trade, together with food and hospitality simply hasn’t materialised.
“‘Shadow COVID’, where the Australian public goes into self-imposed lockdown, and is reticent to engage in social activities such as going on a holiday or heading out for dinner has been quite dominant.”
Creditorwatch monitors insolvencies and did not report a rise in defaults, though slightly better conditions are usual in December.
They are now turning to January and February to see the impact of the fall in trade at what is traditionally the busiest time of the year for many SMEs.
“Everyone was expecting that the rapid spread of Omicron would have a significant adverse impact on Christmas trade, but few would have predicted it to be this extreme,” said Patrick Coughlan, CEO of Creditorwatch.
“Our Business Risk Index data next month will give us a good indication of how bad the damage from Omicron will be over the long term.”