Small business sales up in December, but yearly growth remains sluggish

Small business sales were higher in December for the eighth consecutive month, although yearly growth remained below inflation and retailers in particular were weak.

According to the ANZ Small Business Sales Trend report, sales increased 3.3% compared to December last year, but yearly sales growth was a modest 1.9%.

ANZ general manager of small business Nick Reade says the figures, not adjusted for inflation, reflect a reasonable Christmas trading period.

“[But] anecdotal reports suggest retailers still had to discount strongly to achieve this growth rate and clear their stock,” Reade says.

“The year-to-date growth figure of just 1.9% is still a concern… and remains consistent with generally subdued market conditions.

“While customers are still spending selectively, we’re hopeful that Australians will still look to support small businesses and help sustain the growth that’s slowly starting to become more consistent.”

The aggregate figures hide large variations between various sectors and states.

“What we’re seeing is still a very mixed story for small business sales, with wide gaps across geographies and between segments, particularly between retail verses trades and services,” Reade says.

Retail-related small businesses had only a 1.8% increase in December sales, while the non-retail sector had a 4.5% rise.

Reade says the gap could be because of changing consumer preferences, or due to more direct competition in retail from the rapid growth in online shopping.

Leading the non-retail sector was the automotive sale and repair industry, which saw an 8.2% rise in December sales, followed by trade services, which experienced a 6.4% increase.

In the retail sector, restaurants experienced an impressive 10% increase es on last year, compounding an 11.8% rise the previous December. 

However, appliance and electrical retailers saw a decline in sales, down 2.1% in December. Their woes were shared by clothing and fashion retailers, down 1.5%.

Small businesses in Western Australia increased sales 4.9% in December, while Tasmania and the Australian Capital Territory recorded small drops of 0.3% and 0.4% respectively.

Victoria was above average with 3.9% small business sales growth, while New South Wales only managed 2.5% growth in December.

Small business sales in Queensland grew 3.7%, boosting the state’s 2.1% yearly growth figure, while Northern Territory sales grow 3.8% in December despite falling 1.4% over 2011.

On a yearly basis, Victoria and South Australia achieved the highest rates, at 2.8% and 2.4% respectively; while the ACT saw sales shrink 3.4% in 2011.

ANZ head of Australian economics and property research Ivan Colhoun says the resource states showed improving small business sales over the year.

“It most likely relates to the positive effects of the pick-up in resources-related investment activity occurring in these states, which is expected to strengthen further during 2012,” he says.

“In contrast, the ACT and Tasmania continue to report relatively weak small business sales.”

Colhoun says strong yearly results in South Australia and Victoria reflected better conditions experienced earlier in the year, which have since moderated.

The small business trends report 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 an annual turnover of less than $5 million.

ANZ has about 20% market share of all credit card transactions.