Small business sales up 7.5% in January: ANZ

Small business sales jumped 7.5% in January compared with the same month last year thanks to two interest rate cuts, according to new data from ANZ.

But the bank says SMEs will need to focus on staying “lean, agile and customer-focused” to maintain profitability this year.

The bank’s small business sales trends report, which uses data from credit, debit and Eftpos transactions processed through its merchant systems, shows that services and trades sectors have outperformed retailers.

The report, released this morning, shows that automotive sales were up 13% year-on-year in January, with business services rising 16.9% over the same period. Restaurants were also up 13.4%, ANZ says.

Sales have risen each month since May 2011, and compare with a 3.3% the previous month of December.

ANZ General Manager Small Business Nick Reade says the growth appears to have been driven by the mining states of Queensland, Western Australia and the Northern Territory, with sales in the three states up 8-10% in the month.

Victoria and New South Wales also posted improvements in January, albeit at lower levels of 7.2% and 6.7% respectively. Small business sales in South Australia rose 4.1% year on year, and 2.8% in Tasmania.

ANZ chief economist Judith Toth says the pick-up in small business could be a reflection of the November and December 2011 rate cuts, and “consistent with a range of other indicators that are pointing to a promising start in 2012, including the recent rise in the ANZ job advertisement series.”

The survey follows an SME survey from National Australia Bank for the December quarter showing an improvement in sentiment, although confidence is lowest among our smallest firms.

NAB says confidence lifted in small transport, accommodation, cafés and restaurants and construction, but weakened in retail, health and business services.

“Confidence improved across most states but was generally poor everywhere,” the bank says.

“Conditions improved across all industries in the December quarter, except for business services and health.”

Firms with turnover between $5 and $10 million are now the least pessimistic SME segment, the bank says.

Chief economist Alan Oster says employers’ long-term decisions were “most constrained by global economic uncertainty (now the number one concern) and a lack of demand.”

Meanwhile, comparison site RateCity says 14 banks and eight non-banks have lifted their variable home loan interest rates by an average of 10 basis points since the Reserve Bank’s meeting on February 7.

“Most variable rate borrowers will likely be paying an extra $19 per month for a $300,000 mortgage,” RateCitychief executive officer Damian Smith says.

“While we counted five lenders that have dropped their three-year fixed rates by an average of 10 basis points, those that have increased were by as much as 39 basis points.”