Aussie business turnover lifts as Delta lockdowns end

Monthly business turnover indicator

In October, business turnover lifted in nine out of 13 industries, according to the Australian Bureau of Statistics (ABS).

Turnover rose the most for Accommodation and Food services (up 13.8 per cent) and Arts and recreation services (up 4.8 per cent).

But turnover fell by the most in October for Other services (down 4.7 per cent) and Construction (down 2.7 per cent).

What does it all mean?

• The Australian Bureau of Statistics (ABS) has released the “Monthly Business Turnover Indicator” publication for the third time. So what is business turnover? Turnover is typically the total sales made by a business over a certain time and is also referred to as gross revenue or income. By contrast, profit is a measure of earnings.

• Today’s ABS publication offers rich insights into business turnover, with a key focus on the impact of specific industries from the Covid-19 health crisis and associated government restrictions, such as lockdowns and border closures.

• The timely indicator is calculated from business activity statements (BAS) provided to the Australian Taxation Office (ATO) and covers 13 of 19 industries, including mining, manufacturing, utilities, gas, water, construction, retail trade, wholesale trade, accommodation and food services and transport. Businesses with GST turnover of $20 million or more are required to submit monthly statements, while some smaller firms do so voluntarily.

• Today’s release covers the period to October 2021, including Covid-19 disruptions to the economy. That said, Covid-19 state government restrictions were eased in both NSW (October 11) and Victoria (October 21). The end of Delta lockdowns and greater people mobility in Australia’s south-east led to an immediate rebound in business turnover in October. In fact, turnover rose by the most in the hard-hit Accommodation and Food (up 13.8 per cent), and Arts and recreation (up 4.8 per cent) services industries.

• While business turnover lifted in nine out of 13 industries in October, the Victorian construction industry was shutdown during the Delta virus outbreak from September 20, likely contributing a 2.7 per cent fall in overall turnover. And the Other services sector – which includes personal care services like hairdressing – saw the biggest fall in turnover, down 4.7 per cent as social distancing measures continued to weigh on business activity.

• Over the year to October, all 13 industries reported an increase in business turnover, led by the strongly performing Mining (up 28.5 per cent) and the Transport, postal and warehousing (up 22.3 per cent) industries.

• Other business surveys imply a strong bounce-back in Aussie business activity since the economic re-opening. The ABS business expectations data in the September quarter of 2021 showed the biggest annual lift in planned spending in a decade.

• And according to the NAB, business confidence was near record highs in October. But inflation indicators remain elevated, with purchase and labour costs growth both lifting. The November NAB business survey is issued on Tuesday.

• ACA Research and Fifth Quadrant’s Covid-19 SME sentiment tracker of 400 firms of up to 500 employees conducted from November 4-16, 2021, showed that 44 per cent of SME’s reported a lift in profit margins in November, the most since March. And 36 per cent of SME’s expect their revenue to increase in December, with concerns about business survival easing to levels last seen in May. Sentiment has also improved with 45 per cent of SME’s expecting the Australian economy to strengthen over the next three months as trading conditions become more favourable.

What do you need to know?

Monthly business turnover indicator – October

• In seasonally adjusted terms, the monthly business turnover indicator showed:

“Rises in 9 of the 13 published industries in October 2021

The largest increase was in Accommodation and food services (13.8 per cent)

Falls ranged from -1.9 per cent in Mining to -4.7 per cent in Other services.

All industries rose through the year to October 2021, with Mining showing the largest annual rise (28.5 per cent).”

Published by Ryan Felsman, Senior Economist, CommSec