Sales by small businesses increased by 2.8 per cent in October compared to the same time last year, a survey shows.

It was the sixth consecutive month of positive annual growth in sales for Australian small businesses, The ANZ Small Business Sales Trends report said.

But conditions in the retail sector remain challenging, with services and trades outperforming retail stores.

“Consumer optimism is creeping back, particularly following the RBA interest rate cut earlier this month, and business conditions should slowly start to improve,” ANZ General Manager of Small Business Nick Reade said.

He said there continued to be a gap between retail-related small businesses and the trades and services sectors.