Small business sales were up 2.8% year-on-year in October, according to ANZ’s Small Business Sales Trends report, with automotive, trade and business services showing the best growth rates.
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.
The latest report, for the month of October, reveals small business sales increased by 2.8% year-on-year during the month; the sixth consecutive month of positive annual growth in sales.
Nick Reade, ANZ general manager of small business, says it’s pleasing to see the small business sector post another modest increase in sales, as it’s “no secret” the sector has been doing it tough.
“We’re still seeing retail-related small businesses, such as clothing and fashion outlets, continuing to face weak conditions,” Reade says.
“The gap between retail-related small businesses and the trades and services sectors is continuing, with retail-related turnover growing by just 0.6% year-on-year in October.”
“[This is in comparison to] 4.2% year-on-year for non-retail services.”
Despite the mixed conditions, Reade says there could be a “glimmer of hope on the horizon” for ANZ’s 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,” he says.
“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.”
The ANZ report reveals automotive, trade and business services recorded the best growth rates in October, with respective sales up 8% year-on-year, 4.4% year-on-year and 6% year-on-year.
Restaurants also continue to perform well, with 8.9% year-on-year growth in October, and 9% year-to-date.
The only other retail-related category showing decent growth is “other food outlets”, up 6% year-on-year.
Across the states, sales growth in NSW and Queensland appears to be strengthening, up 4.3% year-on-year and 5.2% year-on-year respectively.
Ivan Colhoun, ANZ head of Australian economics and property research, says the pickup in sales is a positive, particularly for Queensland, which has been slow to recover from natural disasters.
“We know that Queensland’s tourism activity remains soft, but clearly some other types of small businesses are beginning to improve again in Queensland,” Colhoun says.
With regard to 2012, Colhoun says the Reserve Bank has cut its forecasts for Australian growth and inflation, which will have an impact on interest rates.
“There is room for a further cut to the cash rate. The prospect of another cut of 25 basis points in the next few months may encourage… more confidence in consumer spending,” Colhoun says.