The economic news no small business should ignore

The last quarter of 2023 promises the traditionally busiest time on the shopping calendar, along with a slew of economic news that will have economists readying their crystal balls to look ahead to 2024, writes Suzanne Mitchell, Australia Market Lead for GoDaddy.

Between relentless interest rate rises, the growing costs of goods and services and a sluggish economy, it has been a bumpy ride for small businesses this year.

Peering into the economic future is never a perfect art, but here are the milestones to look out for in the coming months that will give small businesses a hint about what to expect next year.

The economic milestones ahead

 Black Friday sales – 24 November 2023

With so much pessimism surrounding retail trade, this month’s Black Friday sales should give a solid insight into consumer sentiment leading into the traditional Christmas shopping period.

Last year, Australians spent some $7.1 billion during the Black Friday weekend shopping event, according to National Australia Bank transaction data.

Online stores were the biggest winners, with the data showing online spend went up 24 per cent compared to the week prior to the sales, while the spend at bricks and mortar stores increased 11 per cent.

The most popular categories for Black Friday shoppers were shoe stores (sales up 146 per cent), camera stores (up 116 per cent), electronics and clothing stores (65 per cent and 64 per cent respectively).

This year retailers are approaching Black Friday off the back of a particularly weak sales period.

Australian Bureau of Statistics figures show retail sales volumes fell for three consecutive quarters to June, the first time since the global financial crisis in 2008, as cost-of-living pressures continue to bite consumers.

Mid-Year Economic and Fiscal Outlook (MYEFO) – December

The Federal Government is obligated to give Australians an update about the economic and fiscal outlook in the six months after it hands down its annual budget.

With so much economic flux in Australia and overseas, MYEFO promises to be an important opportunity for Treasurer Jim Chalmers to reveal Treasury’s latest predictions for the economy and the health of the budget.

Dr Chalmers has recently pointed to the health of China’s economy and its current slowdown as being key to our future fortunes, along with general global economic uncertainty.

He has also indicated the Federal Government expects unemployment to rise in the coming months amid China’s slowdown and the ongoing flow on impact of interest rate rises.

National Accounts – 6 December

 An important supplement to the MYEFO update will be the September quarter National Accounts released by the Australian Bureau of Statistics on 6 December.

The National Accounts are the key economic indicators that economists look to for a sense of the overall health of the Australian economy and how close we are to the dreaded r-word, recession.

The latest National Accounts in September found Australia’s economy grew ever so slightly at 0.4 per cent during the June quarter.

The accounts also reflected the impact of ongoing cost-of-living pressures with Australians reducing their discretionary spending to cover their mortgage repayments and to continue to afford essentials.

Reserve Bank of Australia Board Meeting – 5 December

Mortgage holders will be holding their collective breaths to see if the incoming Reserve Bank (RBA) Governor Michele Bullock shapes up as the Christmas Grinch with a return to interest rate rises.

As at the beginning of November, the RBA has held rates steady from July to October while it waited to see how the international economy was tracking and how a successive run of interest rate rises since May 2022 impacted the local economy.

While the interest rate pause has been a welcome reprieve for homeowners, the Organisation for Economic Co-operation and Development (OECD) has a pessimistic view of where inflation is headed.

The international organisation predicts core inflation in Australia will decline in the coming year to 3.24 per cent in 2024, but that’s still higher than the RBA’s 2-3 per cent target range, raising the prospect of whether more interest rate rises will occur.

The Westpac-Melbourne Institute Index of Consumer Sentiment in September found Australians were significantly more optimistic about rates remaining stable than in August.

In September 48 per cent of those surveyed expected rates to rise over the next year compared to 68 per cent in August. However, only 15 per cent of consumers predict rates will actually fall in the coming year.

It’s not yet clear what challenges and opportunities lie in 2024 for Aussie small businesses, but the next two months will surely set the tone for what we can expect in the year ahead.

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