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Australian small business sales up 6.9 per cent in May

Non-retail sales increased by 9.2 per cent.

Total small business sales in Australia increased by 6.9 per cent in May 2012 compared to the same period last year, according to the monthly small business sales trends survey from ANZ. "Small business" is defined as having an estimated total turnover of under $5m per annum.

Compared to May 2011, retail sales increased by 4 per cent and non-retail sales increased by 9.2 per cent.

On a year-to-date basis, total small business sales grew by 3.8 per cent.

By geography, sales growth improved in western Australia, while it was relatively weak in south Australia, Tasmania and the Australian Capital Territory (ACT).

Nick Reade, general manager of small businesses at ANZ, said:

It’s pleasing to see that small business sales improved this month, with sales increasing by 6.9 per cent year-on-year in May 2012 and 3.8 per cent on a year-to-date basis.

As we’ve seen over the last year or so, some small business sectors are continuing to experience difficult business conditions, while others are tracking along reasonably well.

For example, the trades, business services and automotive industries have all seen good growth on a year-to-date basis, up 4.2 per cent, 5.9 per cent and 7.8 per cent respectively. This data also reinforces what we’re hearing from our customers in these areas, who have said they are beginning to see an increase in work coming through.

We’re also seeing differences in growth rates across the states and territories continue. After some recent patches of weakness, small businesses in New South Wales and Victoria appear to be improving, with sales increasing by 3.4 per cent year-to-date and 3.8 per cent year-to-date respectively.

Although total small businesses appear quite healthy with monthly sales growing by 6.9 per cent year-on-year, we are still seeing some businesses, such as the traditional retailers, doing it tough. In coming months, we’re hoping to see the May and June interest rate cuts further support the small business sector.

Ivan Colhoun, head of Australian economics and property research at ANZ, said:

May’s data again reinforces the divergences between various states and industries that have become familiar to Australian businesses.

Over the past eight months, retail-related small businesses have continued to record weaker sales growth rates than their non-retail counterparts. In May, this trend continued, with retail small businesses rising by approximately 1.4 per cent year-to-date and non-retail small businesses growing by 5.5 per cent year-to-date.

The retail categories of electricals and clothing which are typically the areas heavily exposed to the high Australian dollar – and as a result, vulnerable to the increased prevalence of online shopping platforms – continued to see declining sales in May.

The two-speed geographic nature of small business sales also continued to be reflected in the data, with WA, Queensland, and the NT all recording stronger rates of sales growth. These features of the ANZ small business sales trends report have also been evident in the Australian Bureau of Statistics’s retail trade reports for April and Q1 GDP data.