Experts wary about stronger retail sales figures as business lending ticks up

Experts say it’s still a tough world out there for small retailers, despite official figures showing a better-than-expected jump in retail sales in February.

Peter Strong, the executive director of the Council of Small Business of Australia, said while he had heard of individual businesses picking up business, trade for SMEs is “very patchy, and patchy to the negative side.”

“And that’s no difference to the past 12 months,” Strong said, pointing out that recent collapses are “hardly indicative” of renewed confidence.

While many have put the collapse of apparel chain Colorado and bookstore owner REDgroup down to company-specific issues, Strong is not so sure.

“We’ve had quite a few company-specific issues, haven’t we?”

Retail sales lifted 0.5% in February to $20.535 billion, defying market expectations of a 0.4% increase and pushing the Australian dollar to another record high.

The jump was attributed to heavy discounting and a rebound from weak January sales, which were affected by natural disasters across the eastern seaboard.

But Robert Mallett, of the Tasmania Small Business Council, is more upbeat, saying it’s a “mixed bag” and a well-run business always has an edge in difficult circumstances.

Mallett says one local trophy business has told him that business has never been better, because “people always like to reward other people.”

His advice to SMEs is to not forget the basics.

“When it comes to good business, cashflow, good management: that’s the good stuff. And hang in there.”

Also giving heart to the SME sector are Reserve Bank figures showing monthly business credit growth of 0.6%.

Housing credit lifted 0.5% in February, the central bank said, slightly lower than the previous month’s growth but taking the year-on-year increase to 7%.

The Reserve Bank is tipped to keep rates on hold at 4.75% when it meets next Tuesday.