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Small business sales hold firm in September

  • Small business sales increased by 5.2% y/y in September 2011.
  • Year-to-date sales growth remains relatively flat with growth of just 1.7%.
  • Services and trades sectors continue to outperform retailers.
  • Restaurants again outperformed on a year-to-date basis with growth of 8.9%.
  • South Australia, Victoria and Western Australia outperformed the other states.
  • With moderate inflation outlook and increasing global economic risks, we anticipate a rate cut on Melbourne Cup Day. 

ANZ today released its monthly Small Business Sales Trends report which showed nominal small business sales turnover increased by 5.2% y/y in September 2011. This is the fifth consecutive month of positive annual growth in sales for small businesses.


ANZ Head of Australian Economics and Property Research, Ivan Colhoun said: “Although there was encouraging headline improvement in sales of 5.2% this month, the year-todate growth remains fairly flat, up just 1.7%. And with headline inflation running at around 3.5% y/y in 2011, this implies real (inflation-adjusted) small business sales growth is still relatively weak in September.


“Furthermore, the divergence between retail-oriented small businesses versus the trades and services sectors continues, with retail-related small business turnover growing by just 2.6% y/y in September (and 1.2% YTD) compared with 6.8% y/y (and 2.0% YTD) for non-retail and services small business. 


“This month, the automotive, trade and business services areas are showing the best growth, with monthly sales up 12% y/y, 9.7% y/y and 7.8% y/y respectively. Restaurants continue to perform well, with 8.9% growth YTD, although some of this growth no doubt reflects strong food price inflation this year, since the data are nominal.


“We are also still seeing a mood of heightened consumer caution in Australia, as global economic uncertainties continue and local unemployment rates threaten to drift up. In these circumstances, people remain understandably careful with their spending. No doubt householders and businesses will be watching the next RBA announcement on Melbourne Cup Day on 1 November with interest. With the inflation outlook moderating and global economic risks increasing, ANZ expects the RBA will cut rates by 25 bps as an ‘insurance’ measure and to take monetary policy back toward a more neutral setting. A rate cut on Cup Day may encourage people to think more confidently about our domestic economic outlook and consequently about their own spending,” said Mr Colhoun. 


ANZ General Manager Small Business Nick Reade said: “Unfortunately retailers are still facing a very mixed demand story, with the more discretionary small businesses such as clothing and fashion retailers and appliances and electrical stores continuing to face tough conditions due to changes in consumer priorities, increased competition from internet businesses and the high Australian dollar. 


“Across the states, small business turnover is growing more strongly in South Australia, Victoria and Western Australia, both in September and on a year-to-date basis. Whilst NSW and Queensland sales appear to be accelerating, growth rates remain relatively weaker on a year-to-date basis. This pick up in sales is a welcome trend for Queensland, which has struggled to recover from the devastating effects of last summer’s floods and then the cyclone. 


“Sales growth in the two territories and in Tasmania remains weak with outright falls still evident on a year-to-date basis. These relatively smaller economies seem to be impacted by the current weak consumer and business sentiment. And whilst prospects for the Northern Territory’s economy appear strong due to its exposure to mining activity, the ACT and Tasmania are probably not benefiting from the surge in resources-related investment activity that is going on mainly in Western Australia and Queensland,” said Mr Reade. 


The data is based on the value of credit, debit and Eftpos transactions processed through ANZ merchant terminals and all ANZ card transactions processed through other systems for businesses at least two years old with annual turnover less than $5 million. ANZ has approximately 20% market share of all card transactions. 


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