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Traditional retailers feeling the pre-Christmas pinch

ANZ today released its Small Business Sales Trends report for November which showed that small business sales rose by 4.8% y/y and by 3.5% y/y in the three months to November


Overall, sales growth among small businesses remained modest. Across the different sectors, food and travel-related sales continued to grow strongly while sales at more ‘traditional’ retailers such as those selling appliances, clothing and homewares remained weak.


Across the states, small business sales in the resource-rich states of Western Australia and Northern Territory continued to outperform.


ANZ General Manager of Small Business, Nick Reade, said:


“Small businesses in Australia are still doing it tough. Many are feeling the continued pull-back in consumer spending as a result of the economic turmoil in Europe and subsequent impact on the mining industry on home soil. Some businesses are also grappling with the flow-on effects of a high Australian dollar.


“Although recent reductions in interest rates could stimulate some pre-Christmas spending, small businesses will have to continue to manage their costs and cashflows very closely. However, with interest rates set to drop during 2013, the small business sector could be facing some welcome relief.


“ANZ is committed to supporting small businesses during this challenging time and we have Small Business Specialists in local areas across the country who can offer advice and assistance.”


ANZ Head of Australian Economics & Property Research, Ivan Colhoun, said: 


“Overall, growth in small business sales has remained soft and continues to show very mixed outcomes across different sectors and states. Small business sales of homewares such as furniture, electricals and appliances have been weak for most of the year. This partly reflects the weakness in residential building construction as some spending on homewares is associated with new house purchases or home renovations. Additionally, some of these items have been impacted by the high Australian dollar which has led to increased price competition in some sectors. Conversely, sales of automobiles and related items have benefited from the high currency.


“Small business sales growth in the mining states of Western Australia and Northern Territory has remained strong. However, the uncertain outlook for mining investment could lead to less robust growth in 2013. Job advertising in both states has fallen relatively sharply recently, while conditions for mining businesses have similarly weakened. The unemployment rate in Western Australia has risen in recent months, although from low levels.


“Due to the adverse impact the high Australian dollar is having on a number of sectors, the deterioration in job advertisements and business conditions and the fact that the non-mining sector is showing few signs of improvement, ANZ forecasts a further 1 percentage point cut in the official cash rate over the course of 2013.” 


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