ANZ today released its monthly Small Business Sales Trends report which showed small business sales were up again this month, with an increase of 2.8% y/y in October 2011. This is the sixth consecutive month of positive annual growth in sales for Australian small businesses.
ANZ General Manager Small Business Nick Reade said: “It’s pleasing to see that overall small businesses have posted another modest increase in sales this month, as it’s no secret that for a while now small businesses have been doing it tough.
“We’re still seeing retail-related small businesses, such as clothing and fashion outlets, continuing to face weak conditions. The gap between retail-related small businesses and the trades and services sectors is continuing, with retail-related turnover growing by just 0.6% y/y in October (and 1.5% YTD) compared with 4.2% y/y (and 2.1% YTD) for nonretail services.
“Despite these mixed conditions, we’re hopeful that there’s a glimmer of hope on the horizon for our small business customers. Overall, consumer optimism is creeping back, particularly following the RBA interest rate cut earlier this month, and business conditions should slowly start to improve.
“We’re hopeful that despite the recent mood of consumer caution, consumer spending will make a comeback, particularly as shoppers gear up for the Christmas trading period,” Mr Reade said.
ANZ Head of Australian Economics and Property Research, Ivan Colhoun said: “The data this month shows slightly weaker growth (in annual terms) than in September and August, but the positive momentum has been maintained. Reflecting the modest improvement in conditions for some small businesses during 2011, year-to-date growth is gradually picking up (to 1.9% this month from 1.7% last month). This is nominal however, so with headline inflation running at around 3.5% y/y in 2011, these numbers imply real (inflation-adjusted) sales growth is still relatively weak in October.
“As has been the pattern for the past few months, automotive, trade and business services are showing the best growth rates in October, with monthly sales up 8.0% y/y, 4.4% y/y and 6.0% y/y respectively. Restaurants also continue to perform well, with 8.9% y/y growth this month and 9.0% YTD. ‘Other food outlets’ is the only other retailrelated category that is showing decent growth for 2011 YTD (6.0% y/y).
“Across the states, NSW and Queensland sales growth appears to be strengthening, with 4.3% y/y and 5.2% y/y this month respectively (although they remain relatively weaker on a year-to-date basis, reflecting the big falls in activity seen earlier in the year). This pick up in sales is a welcome trend for Queensland in particular, which has been slow to recover from the devastating effects of last summer’s floods and cyclone Yasi. We know that Queensland’s tourism activity remains soft, but clearly some other types of small businesses are beginning to improve again in Queensland”, said Mr Colhoun.
“Overall with the ongoing problems in the global economy and the slow down in growth here in Australia, the RBA saw a need to ease monetary policy on Melbourne Cup Day. Looking ahead, the RBA has also cut its forecasts for Australian growth and inflation in 2012. We think there is room for a further cut to the cash rate. The prospect of another cut of 25 bps some time in the next few months may encourage more confidence in our domestic economic outlook and more confidence in consumer spending,” Mr Colhoun said.
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.