Austrian Small Businesses See Drop in Sales and Profit

Austrian Small Businesses See Drop in Sales and Profit

Image: APA/dpa/Bernd Weißbrod

 

More than half of small and medium-sized enterprises (SMEs) in Austria have reported a drop in profitability as the country continues to face a challenging economic environment, according to a new survey.

The survey, carried out by the credit reference agency Creditreform, also shows that nearly half of the businesses surveyed experienced a decline in orders, with just 11% seeing an increase. Turnover has also fallen for 43.2% of firms, up from 38.9% last year, while only 16.7% reported a rise in turnover. The report notes this is the worst turnover performance in 25 years.

Job Cuts and Investment Problems

As a result of these financial pressures, 28.6% of businesses have made the difficult decision to reduce their workforce in the past six months. The manufacturing and construction sectors have been particularly hard-hit, with around a third of companies in these industries making job cuts.

Looking ahead, Creditreform predicts that the trend of declining employment will continue, as investment levels remain at a historic low. Only 31.4% of businesses plan to invest in the near future, a sharp 42.8% drop compared to last year.

Pessimistic Outlook

When asked about their expectations for the coming months, SMEs expressed widespread pessimism. Only 14.6% of businesses expect turnover to rise over the next six months, while 36.4% anticipate further declines. The construction sector, in particular, is bracing for a difficult period.

More than half of the firms surveyed rated current economic policies as inadequate. Creditreform noted that SMEs are particularly concerned about bureaucracy and the ongoing skills shortage. Inflation, high energy costs, rising interest rates, and a lack of planning certainty are also adding to the strain on businesses.

Read more: Austria’s Economic Decline: What Can Be Done to Stop It?

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