Spending recovery in question as performance slows
Although economy-wide spending continues to rise, growth appears to be slowing, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
- (1888PressRelease) May 22, 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 0.5 per cent in trend terms in April, following a 0.6 per cent gain in March and 0.8 per cent increase in February.
According to Matt Comyn, Executive General Manager, Local Business Banking, Commonwealth Bank, despite what looked to be a longer-term recovery for business sales, the latest figures revealed that the story was not as positive as first hoped.
“Although things had looked promising, clearly the fragility we have witnessed in consumer confidence is still playing an active role in constraining the level of spending flowing through to businesses,” said Mr Comyn.
“This has resulted in economy-wide spending growing at the slowest pace in seven months. However, the recent rate reduction by the Reserve Bank, coupled with more favourable jobs data, may assist in lifting consumer confidence and sentiment over the next few months and act as an instigator for additional spending.”
“It remains to be seen whether or not these developments will create enough of a flow-on effect to boost spending and whether this will assist in closing down the disparity in performance amongst sectors, something which has been more prominent in the April data.”
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, said that the path to recovery was still clearly a work in progress.
“While there has been positive momentum in spending, trend growth has eased over the past four months,” said Mr James.
“The issue we have is that there is no clear-cut story when it comes to the economy. The ongoing challenges faced overseas continue to factor in to local spending decisions and whilst this uncertainty remains, it’s likely we will continue to see lower levels of growth in the near to medium-term.”
Industry analysis – disparity amongst sectors grows
Six of the industry sectors fell in April, up from five in March and four in February. The strongest monthly trend increase in sales occurred in the Amusement & Entertainment sector (up 2.3 per cent), followed by Wholesale Distributors & Manufacturers sector (up 2.2 per cent), Contracted Services (up 1.2 per cent), Mail Order & Telephone Order Providers (up 1.0 per cent) and Utilities (up by 0.8 per cent). Amusement & Entertainment remains the strongest performer in annual terms, to be 22.6 per cent higher than one year ago.
Amongst the weakest sectors in April was Hotels & Motels, down by 0.3 per cent, and the tenth straight decline. Business Services also fell in April for the fifth straight month, down by 0.1 per cent.
State / Territory analysis – positive story shifts as weakness emerges
Two of the states and territories recorded weaker sales in trend terms in April. Sales in Tasmania fell by 0.6 per cent while sales fell 0.4 per cent in trend terms in the Northern Territory. After seven straight months of gains, sales in the Northern Territory have fallen for the past three months.
The strongest result was in South Australia (up 1.0 per cent) followed by Queensland (up 0.8 per cent), ACT and NSW (both up 0.4 per cent), Victoria (up 0.3 per cent) and Western Australia (up 0.2 per cent). The trend BSI has now risen for ten straight months in Queensland and for nine straight months in South Australia, NSW, Western Australia and Victoria.
“It’s important to note that whilst there is a slowing in the latest numbers, spending is still occurring but it is at muted levels,” said Mr James. “Consumers need more good news to offset their concerns. With a more favourable outlook for households from the Federal Budget we may see an associated uptick in May but that is just one month; what lies beyond that is far more important.”
Media Inquiries:
Tim Mullen
Phone: 02 9118 1667 / 0424 141 483
Email: tim.mullen ( @ ) cba dot com.au
###
space
space
Satisfied Users & 
Approved Press Releases
Print
Email
Report Spam