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Small business sales reveal flat retail conditions persisting

ANZ today released its Small Business Sales Trends report for September which showed that small business sales rose by 0.4% y/y in September and by 2.5% y/y in three months to September. 


Small businesses in the mining states of Western Australia and the Northern Territory, and to a lesser extent Queensland, continued to outperform. While trading conditions across the other states remained relatively more challenging, New South Wales continued to show signs of improvement.


Food and travel-related sales continued to grow relatively strongly which is in contrast to the more traditional retail products such as appliances, clothing and homewares which remained weak.


ANZ General Manager of Small Business, Nick Reade, said: “Overall the growth in small business sales has remained relatively soft this month and trading conditions across different sectors have remained varied.


“Figures in previous months had suggested a possible resurrection in retail-related small business sales; however the weakness appears to have returned, with sales up only 1.3 per cent over the year to the last three months.


“The changing consumer spending patterns and the persistently high Australian dollar continues to encourage spending online and overseas, which is having a negative impact on our traditional retailers,” Mr Reade said.


ANZ Head of Australian Economics, Corporate and Commercial, Justin Fabo, said: “Small business sales of homeware items such as appliances, electricals and furniture, have been contracting recently which is partly due to weakness in the building industry. Some spending on these items is associated with new house purchases or home renovations and is therefore linked to the health of the wider housing market. Spending on trade services, such as construction and plumbing, has also been weak.


“Across the states, small business sales in Western Australia and the Northern Territory, which are benefiting from mining-related activity, continued to significantly outperform.


However, given some recent cancellations and delays of a number of mining projects, recent falls in the prices of some key commodities and signs of softer labour conditions in the mining sector, means we will be watching activity in the mining states closely.


“Due to the current challenges facing the Australian economy, including the recent weakness in commodity prices, we expect the Reserve Bank of Australia to lower the official cash rate further which may assist with stimulating growth in future sales,” Mr Fabo said. 


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