The latest Cepyme indicators reveal that sales growth for small and medium enterprises (SMEs) is lagging behind rising costs, leading to a noticeable squeeze on profit margins. In the May release, Cepyme reports that total SME turnover rose by 23 percent in the first quarter of 2022, while sales increased about 19.8 percent. The result is tighter margins, weaker liquidity, and reduced competitive strength for many firms, a situation Cepyme describes as a risk to overall SME resilience (Cepyme, May edition).
The Cepyme indicator is built from an analysis of 15 economic metrics compiled by the association of employers. It tracks several dimensions that influence SME performance, including turnover, employment, the number of active companies, labor costs, and the costs of services and supplies. It also measures access to credit, interest rates, and credit risk premiums. In addition, solvency indicators such as the number of competitors, average payment period, and the ratio of liabilities to equity are considered, alongside competitiveness metrics like net return on assets, productivity, and firm size. These components collectively illuminate the pulse of the SME sector at a given moment (Cepyme, May edition).
Eurozone inflation went wild: 8.1% in May
Cepyme’s analysis suggests that SMEs are navigating their most challenging period since 2014, with a clear forecast of higher interest rates and tighter credit conditions on the horizon. The indebtedness built up during the pandemic remains a central concern. In 2021, the liabilities of SMEs relative to their net assets rose by 10 percentage points, reaching 96 percent, a signal of heightened leverage in the sector. The report also notes a persistent rise in business expenses in early 2022, with first-quarter costs increasing by about 5.7 percent, and a decline in cost efficiency from 3.7 percent in 2019 to around 3 percent in the first quarter of 2022.
According to Cepyme, even as activity within Spanish firms begins to rebound, profitability does not keep pace. The post-pandemic recovery shows signs of lagging, and the inflationary pressures that intensified in 2022 contribute to a weaker earnings picture. The May edition of Cepyme’s report highlights inflation as a core factor shaping the overall profitability landscape, underscoring the urgency for SMEs to manage costs, sustain liquidity, and bolster resilience in the face of a tightening monetary environment (Cepyme, May edition).