MYOB data shows small businesses are experiencing a spending cold snap; a big concern as Christmas looms

The data shows cash deposit markers are behaving very differently this year compared to 2021 and 2022. From June, cash deposits have started to decline compared with the first half of 2023 - while previous years have seen cash deposit rates increase steadily as the year progresses.

Additionally, EFT deposits, a marker of health for consumer-facing businesses such as retail or hospitality, are flat compared to the growth trajectory seen in 2022.

This data suggests that interest rate changes are hitting small businesses in ways not commonly measured and the impacts of a tightening on consumer spending are starting to take a toll.

Emma Fawcett, MYOB General Manager - SME, said "when we look at 2022 data, in each month that interest rates went up we can see a clear dip in spending across the days following the interest rate decision, before it then picks back up for the rest of the month.

"However, in 2023, we can see the delayed impact cost of living, interest rate increases and inflation is having on small businesses. As we head into the Christmas season, we are concerned this trend will continue and SMEs will struggle to hit their sales targets for a usually very busy period. We are concerned about the effects any potential interest rates over the next few months will have, adding strain to an already flattening sector. This will have a direct impact on business preparedness and confidence as we head into 2024.

"We are encouraging everyone to shop local, even if you can't spend as much as in previous years. Small businesses are the lifeblood of Australia's economy and if they are struggling, the whole economy will be struggling in the months ahead."