Business sales growth slows as consumers pull back on spending
The rate of sales growth has slowed for small and mid-market businesses in the first half of this year, with businesses navigating a range of economic headwinds, a COSBOA report reveals.
Recent data from COSBOA and Square indicates that growth rates for Australian businesses are now at a similar level to before the pandemic, following a COVID-19 spending pullback and strong spending rebound.
The Quarterly Small and Micro Business Index report indicated sales growth through 2022 and 2023 was a mixed picture for small businesses. Growth rates decreased slightly across all segments during the first and second quarter of 2023.
Micro businesses were the only category to increase sales volume since the previous report, with an increase in sales volume of 6.02 per cent.
“Micro business sales rose 12.02 per cent year on year in June. Using June’s Consumer Price Index (CPI) as a proxy for prices, sales volume rose 6.02 per cent. This is a change of +4.97 per cent since last quarter’s report,” the report said.
Small to medium business sales rose 2.29 per cent, according to the report.
“Small to medium business sales rose 8.29 per cent year on year in June. Using June’s CPI as a proxy for prices, this means sales volumes rose 2.29 per cent,” it said.
“This is a change of - 0.51 per cent since last quarter’s report.”
Sales for mid-market businesses rose only 1.06 per cent, the report said.
“Mid-Market business sales rose 7.06 per cent year on year in June. Using January’s CPI as a proxy for prices, mid-market business sales volume rose 1.06 per cent,” it stated.
“This is a change of -0.64 per cent since the last quarter’s report.”
The report said that the ability of small business to adapt innovate and maintain productivity will be crucial in navigating the economic landscape ahead.
“With the proper support, the productivity predicament that Australia faces can be mitigated by the relentless drive and resilience of our small business community,” COSBOA said in the report.
While the data in the report indicates that growth rates are at pre-pandemic levels, many businesses are preparing for a pullback in consumer spending, said Marco Lamantia, executive director for Square in Australia.
“But rather than bunker down, we’re seeing businesses be proactive. They’re creating new revenue streams to unlock growth, and turning to software to automate their operations to do more with less and build resilience,” said Mr Lamantia.
Staff shortages still impacting businesses
The report also highlighted the strain small businesses are facing from a labour standpoint with vacancy numbers at 189.3 per cent of pre-pandemic levels.
“Arts and recreation, as well as accommodation and food services, may have recorded the largest improvements since Q2 2023, but these industries are still facing the highest job vacancy rates of all industries at 227.8 per cent and 188.3 per cent of pre-pandemic levels respectively,” the report said.
The current market dynamics have already significantly increased the cost of employment for small businesses, said COSBOA chief executive Achterstraat from COSBOA.
“With the small business sector facing increasing costs across the board, it is vital that the Federal Government continue to provide support and fit-for-purpose policy settings.”
The high vacancy numbers for jobs at 189.3 per cent of pre-pandemic levels, highlight the strain small businesses are still facing from a labour standpoint.
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