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Small business sales rise, but outlook remains weak in non-resource states

ANZ today released its Small Business Sales Trends report for October. Sales appear to have been dampened in months where the AFL grand finals were held, presumably as people spent time watching football rather spending money elsewhere. 


Overall, sales growth among small businesses remained relatively soft, but outperformed in the resources-rich states of Western Australia (WA) and Northern Territory (NT). In other sectors, food and travel-related sales continued to grow strongly while sales of appliances, clothing and homewares remained weak.


ANZ General Manager of Small Business, Nick Reade, said: “There’s no doubt the environment continues to remain challenging for small business in Australia – particularly for those in sectors and states not involved in the mining industry. Overall, growth in small business sales has remained quite soft and mixed across sectors and states.


“It’s positive to see such a strong result for companies offering travel and food-related services, but for retailers selling appliances like fridges and TVs, clothing and household items, the outlook remains less favourable.


“Looking ahead, companies will be under pressure to adapt to these conditions and remain competitive. Those exposed to interest rate sensitive parts of the economy, including housing and durables consumption, are likely to see some benefit from the reduction in interest rates over the past year. Nevertheless, we expect only a gradual pick-up in these sectors during 2013.”


ANZ Head of Australian Economics, Corporate & Commercial, Justin Fabo, said: “Non-food retailing continued to underperform food and services sales. To some extent this is likely to reflect that price competition – itself related to the high Australian dollar – has been most fierce in goods-based retailing.


“Small business sales growth in the resource-rich states of WA and NT has remained a standout. We are closely watching how events are unfolding in WA given the importance of mining to that state’s economy. Recently, the unemployment rate in WA has risen from very low levels and job advertising has fallen sharply in line with weaker commodity prices, possibly foreshadowing some moderation in small business sales growth in that state.


“After a long period of underperformance, small business sales in NSW continue to show tentative signs of improving. There is also now little difference between sales in metropolitan and rural areas.” 


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