Rural SMEs ride resource boom
Rural and regional small-to-medium businesses (SMEs) are growing faster than their metropolitan counter-parts thanks to the influx of funds from the mining boom, disaster recovery funding and good agricultural output, according to a monthly economic report released by the ANZ.
The report said the favorable trading conditions in rural and regional Australia reflected the two-speed nature of the Australian economy and the differential impact strong commodity prices and rising interest rates are having on regional versus metro areas.
The ANZ Small Business Sales Trends series shows growth in regional and rural small businesses was up 1.9% y/y compared to relatively flat growth (-0.1% y/y) in capital cities. The data is based on the value of credit and Eftpos transactions processed through ANZ systems and ANZ cards transactions processed through other systems for businesses at least two years old with turnover less than $5 million. ANZ has approximately 20% market share of all card transactions.
However, Nick Reade, ANZ general manager for small business, says that difficult prevailing economic conditions are contributing to the creation of a patch-work economy in regional areas.
“Australian small businesses are still doing it tough. While it’s pleasing to see some growth returning to the sector there are still some areas doing it significantly harder than others.” Mr. Reade said.
“With costs continuing to rise it will be even more important for businesses to manage their cash flow in a fairly stagnant growth environment. Currency exposed categories will also need to look at their business models given the high Australian dollar, which shows no real signs of abating,”
Overall, the survey found;
- Small business sales improved in April, up 0.6% year on year, but remain weak
- Regional small businesses performing better than metro areas
- Extended Easter break has impact on small business sales
- Victoria, South Australia and Queensland showing strongest growth in April
- Retail-related small business sales improved relative to last April, but remained weak, implying another difficult trading month for broader retailing in April
“The strongest sales growth in April (y/y) was recorded in services such as hotels and motels, restaurants, travel and entertainment, and trades, which is probably a result of the unusually long Easter holiday this year.” ANZ Head of Australian Economics & Property Research, Ivan Colhoun said
“Conversely, small business sales contracted in April (y/y) for business services, clothing and fashion retailers and personal services."