The Australian Bureau of Statistics (ABS) has published its latest Monthly Business Turnover data, recording falls across eight of the 13 reported industries in November.
The arts and recreation services industry took the biggest hit, down 6.6 per cent following a 3.2 per cent dip in October.
Monthly declines in turnover were also recorded across the utilities services sector (4.4 per cent); accommodation (2.8 per cent); construction (1 per cent); wholesale trade (0.8 per cent); information, media and telecommunications (0.4 per cent); administrative and support services (0.3 per cent); and manufacturing (0.1 per cent).
This was the first time most of the 13 industries tracked by the ABS recorded monthly declines since January 2022.
Sybille McKeown, ABS head of industry statistics, attributed the result to subdued spending off the back of higher interest rates.
“The positive impact from the relaxing of COVID-19 Delta lockdowns towards the end of 2021 has been replaced with declining ‘discretionary’ spending in the face of rising interest rates and inflation,” he said.
Despite weakening consumer sentiment, turnover improved across ‘other services’ (9.1 per cent); retail (2.9 per cent); mining (1.2 per cent); transport, postal and warehousing (1.2 per cent); and professional, scientific, and technical services (1.1 per cent).
However, retail spending — which benefited from the pre-Christmas rush — is expected to wane over the coming months.
Markets are bracing for a mid-year recession across the developed world, with corporate earnings to feel the brunt of weakening consumer sentiment.
According to Garth Rossler, chief investment officer at Maple-Brown Abbott, the trajectory of corporate earnings is the “biggest uncertainty” facing investors in 2023.
“Higher interest rates help to rein in inflation, but at least some of this will be achieved through reducing economic growth,” he said.
Mr Rossler has flagged heightened risk among premium-rated growth and yield stocks, which he has claimed have not “fully adjusted” to a higher interest rate environment.
“There has been little in the way of consensus earnings downgrades for industrials in Australia, but we are starting to see some movement in the US,” he added.
“Of most interest is what is happening in the tech sector, which enjoyed an extraordinary uplift in earnings during [COVID-19], though those earnings have started to decline.”
