Business and trade services fuel growth in small business
- Small business sales in May grew 3.1% year on year
- Sales bounce back from impact of ANZAC Day and Easter public holidays suppressed turnover
- Retail-related small business sales remain generally weak but business services up 11.6% year on year
- South Australia, NSW, Victoria and Western Australia recorded the strongest growth
- Regional small businesses continue to perform better than metropolitan areas
ANZ today released its monthly report into small business sales trends that showed sales had their strongest monthly growth in 15 months with an increase of 3.1% led by a strong performance in the non-retail sector.
The data is based on the value of credit and Eftpos transactions processed through ANZ systems and ANZ card transactions processed through other systems for businesses at least two years old with turnover less than $5 million.
ANZ has approximately 20% market share of all card transactions. ANZ’s Head of Australian Economics & Property Research, Ivan Colhoun said: “This month we saw the majority of growth improvements in the non-retail or services segments of small business.
“The best performing industry segments were business services (up 11.6% y/y), and trades (up 8.5% y/y). Importantly, this data supports other economic indicators which indicate retail spending on goods is still relatively flat at present, but spending on services, trades and other 'non-retail' areas is performing slightly better.
“On the other hand, clothing and furniture small businesses recorded a fall in revenues year on year, while sales for retail-related small businesses grew only 0.2% y/y. This indicates an element of continuing price deflation in these segments as well as generally more cautious consumer spending activity.
“Like last month, small businesses in regional locations experienced slightly stronger sales growth than their metropolitan counterparts, although the gap did narrow this month. This may reflect the mix of small businesses in each region, with more (relatively hard-hit) retailers concentrated in the metro regions, and a greater mix of small businesses providing business and trade services in regional locations. More broadly, the strong outlook for the mining and agricultural sectors is expected to support continued outperformance in regional areas.
“Across the states, the best small business sales growth was recorded in South Australia, NSW, Victoria and Western Australia. So far this year it’s been South Australia outperforming the other states in sales growth.
NSW small business sales showed some improvement this month with growth up 3.7%; however it has, on average, contracted each month in 2011 to date. “Again, these differences across states support the evidence from other indicators which suggest NSW is still relatively slow, and Queensland still inconsistent due to the lingering effects of the recent natural disasters and the subsequent rebuilding process.
In Victoria the data reflects a strong performance with continuing stronger population, employment and housing construction rates” said Mr Colhoun.
ANZ’s General Manager for Small Business, Nick Reade said: “We’re pleased to see growth coming back into some sectors but tough trading conditions in retail means some businesses will continue to be under pressure to manage cash flow through the cycle.”
“For us, it’s important that we continue to focus on understanding the pressures our small business customers are facing and have the best solutions available to help them succeed,” said Mr Reade.