Small business sales drop 5 per cent

Small businesses are seeing reduced sales, particularly for firms in retail and construction, with new ANZ statistics indicating sales fell by 5.3 per cent in the year to February 2013.

ANZ's economist Justin Fabo said that the fall in sales activity could be attributed to last year's leap year, which accounted for one extra trading day compared to this year. Mr Fabo also said that soft business confidence was another driver of reduced sales.

This is according to ANZ's Small Business Sales Trends report, which revealed that year-on-year growth was negative in nearly all sectors except for cafes and restaurants, and professional services - which recorded growth of 6.2 per cent and one per cent respectively. In the three months of February, however an additional number of sectors saw an increase in sales. The food, cafes and restaurants, and utilities and postal sectors were standout performers, recording growth of 1.9 per cent, 8.8 per cent and 4.3 per cent respectively.

When it came to location breakdown, growth in all states contracted with Tasmania, the ACT and Victoria the worst performers with negative growth of 8.3 per cent, 7.7 per cent and 6.3 per cent each. Northern Territory businesses only recorded a 2.6 per cent drop in sales. However, over the three months to February 2013, the Northern Territory, Western Australia and Queensland experienced sales growth of 2.3 per cent, 1.6 per cent and 0.7 per cent respectively.

According to Mr Fabo, conditions look set to improve in 2013 after a weak second half in 2012.

"Relatively low interest rates and higher housing and equity prices have supported an increase in consumer confidence to above average levels. We expect this to translate into higher spending growth and better trading conditions for small businesses.

"Small businesses that have adapted more quickly to the changing spending patterns of households and the high Australian dollar should also typically see more favourable sales outcomes. However, sluggish expected employment and wages growth will likely limit the scope for upside surprises in small business sales growth this year."

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