Recovery underway as business sales continue to grow
A firm recovery in spending appears to be underway across the country with business sales once again experiencing positive growth in February, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
- (1888PressRelease) March 20, 2012 - The BSI* is a key measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, a sample of approximately 30 per cent of the Australian market. The BSI rose by 0.7 per cent in trend terms in February, following 0.9 per cent gains in December and January.
According to Matt Comyn, Executive General Manager, Local Business Banking, Commonwealth Bank, despite a modest slowdown in the growth rate in February, the continued positive results would be welcomed by businesses, although it was clear they remained cautious.
“The figures demonstrate that the recovery is gathering momentum and the willingness to spend is becoming more defined every month,” said Mr Comyn.
“Consumers are showing resilience against the uncertainty we have been experiencing in domestic and global markets. The latest figures reveal that although their spending habits are still relatively meek by pre-GFC standards, the intention to continue spending is there and that bodes well for the economy.”
“What needs to be taken into consideration, however, is that confidence on the whole is still shaky. Despite this solid growth, consumers are spooked easily and that means that any significant negative economic news has the ability to change things very quickly.”
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, said that the recovery was continuing to be framed by the performance at a sector level and across States and Territories.
“When you look behind the headline figure at what is happening at a sector level, the overall picture is much more positive than what we saw over much of 2011,” said Mr James.
“The sectors where we had been hearing the most negative news were in fact the key beneficiaries of increased spending in February. Wholesale Distributors & Manufacturers posted positive gains, as did Retail Stores and Clothing Stores, both of which have been doing it tough.”
Industry analysis – struggling sectors show signs of improvement
Across sectors, only three of the industry sectors fell in February, with two other sectors – Automobile & Vehicles and Miscellaneous Services broadly flat. Wholesale Distributors & Manufacturers recorded the strongest gain in February (up 1.7 per cent) followed by Clothing Stores, Retail Stores and Contracted Services (all up 1.3 per cent) and Amusement & Entertainment (up by 1.1 per cent).
The weakest sector in February was Hotels & Motels (down 1.0 per cent) followed by Mail Order & Telephone Order Providers and Business Services (both down 0.3 per cent). It was the first decline in sales for Mail Order & Telephone Order Providers after 12 months of gains. Spending at Miscellaneous Services has been flat for two months after five months of gains.
State / Territory analysis – positive across the board
For the fifth straight month, none of the states and territories recorded weaker sales in trend terms, although the BSI for Western Australia was largely flat. The strongest results were in the ACT and South Australia (both up 1.1 per cent) followed by Northern Territory (up 0.8 per cent), Queensland and Victoria (both up 0.7 per cent), NSW (up 0.4 per cent) and Tasmania (up 0.3 per cent).
The trend BSI for Northern Territory has now risen for eight straight months but the growth pace has eased over the past two months. All other states and territories have recorded stronger trend spending growth for seven straight months except ACT (up for five months) and Western Australia (flat after six monthly gains).
“Consumers will want to see more good news if they are to increase the amount they spend,” said Mr James. “Greater signs of stability in Europe, job growth and calmer financial markets are all key influences on sentiment. However, there are those that are willing to keep spending without such factors and it’s these individuals that are helping to keep the hopes of a sustained recovery alive.”
Media Inquiries:
Tim Mullen
Phone: 02 9118 1667 / 0424 141 483
Email: tim.mullen ( @ ) cba dot com.au
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