ANZ today released its monthly Small Business Sales Trends report which showed that small business sales rose 2.8% year-on-year (y/y) in April 2012. This month’s report again reveals similar trends seen over the past six months, including differences in growth rates between retail and non-retail sectors, and between the mining and nonmining states.
Retail-related small business sales were particularly soft in April, recording a year-onyear decline of 2.1%. Categories such as travel, entertainment and accommodation appear to have weaker y/y growth figures for April, however with Easter having occurred in early April, sales for these categories may have been recorded in late March (thereby artificially depressing April’s y/y growth, and correspondingly boosting March’s). Comparing the cumulative sales for March and April in these categories with the same period last year does provides a slightly less negative picture of April’s activity.
Sales in the mining states were again relatively stronger compared with the non-mining states, although the disparity was less pronounced, with sales growth in New South Wales and Victoria comparable with those in Queensland and the Northern Territory.
ANZ General Manager of Small Business Nick Reade said: “Total small business sales are tracking along reasonably well, however, some sectors are doing much better than others. The data also aligns with what we are hearing from small businesses owners – where increased competition and discounting are continuing to affect business conditions.
“Retail businesses are feeling the pressure, although we are seeing some early signs of improvement. The two recent stimulus measures - this month’s interest rate cut and the Federal Budget stimulus measures– should boost retail activity over the coming months.
“Despite the economic uncertainty, many small businesses are continuing to invest and we’re seeing a healthy level of start-ups joining the sector. We currently approve nine out of 10 small business loan applications, and around seven out of 10 start-up loans – which businesses are pleasantly surprised at, given the rhetoric about banks not supporting small business,” Mr Reade said.
Ivan Colhoun, Head of Australian Economics and Property Research said: “The Small Business Sales Trends series continues to reaffirm the familiar themes evident in the wider economy.
“Again, mining states are collectively stronger, with Western Australia particularly strong (+6.0% y/y) and states such as ACT (-1.6% y/y) and South Australia (-0.3% y/y) relatively weak. However, NSW and Victoria did record moderate growth rates in April on both a year-on-year and year-to-date basis.
“These state divergences are influencing some of the relative sectoral strengths within small business sales. For example, for the past 10 months, the automotive sector has recorded solid year-on-year growth, which mirrors Western Australia’s growth profile. With its relatively high disposable income, more people in Western Australia are choosing to spend money on motor vehicles, and this behaviour is broadly in line with growth seen in the ABS series on aggregate motor vehicle sales.
“We expect the RBA’s 50bps cut in the official cash rate (which provides around a net 30bps reduction in variable mortgage rates), to provide some support to consumers’ cash flows and confidence, and therefore retailers in the coming months. ANZ expects an additional 75bps of official interest rate cuts by the end of 2012, which includes a rate reduction in early June,” Mr Colhoun said.