The Commonwealth Bank launches Australian Business Sales Indicator
New research reveals consumer spend plateaus after strong growth
Monday 30 November, 2009: Australian consumer spend has steadied during October following strong months of growth, according to a new Business Sales Indicator(i) released by the Commonwealth Bank today.
The Commonwealth Bank Business Sales Indicator tracks the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities across 20 industry sectors throughout Australia.
According to Symon Brewis-Weston, Executive General Manager Commonwealth Bank Local Business Banking, the Business Sales Indicator provides Australian consumers and business owners with a unique insight into household and business spend.
“The Commonwealth Bank Business Sales Indicator showed consumer spend had stabilised at 0.3 per cent in trend terms during October, slightly lower than recorded in September. This month represents the third consecutive month of slower growth,” he said.
“This represents both a positive signal for Australian businesses, but also an area to watch.
“Operating conditions for most Australian businesses remain volatile. It is not surprising to see business sales plateau this month as we see consumer spend stabilise as stimulus packages run dry and interest rates begin to move after what was a significant period of economic uncertainty.”
Commonwealth Bank’s Chief Equities Economist, Craig James, said overall, the Commonwealth Bank’s gauge of economy-wide spending has recorded positive trend growth over the past 11 months, but growth rates are far slower than those recorded in 2006 and 2007.
“The Indicator picked up sharply in late 2008 in response to the Federal Government’s first stimulus package. Previously, the Indicator had been weak during 2008, falling from January to March 2008, flat-lining through to September and then easing slightly again in October and November,” Mr James said.
According to the October Business Sales Indicator, in trend terms, the value of spending transactions fell in five of 20 industries during October. Sales in the Automobiles sector have now eased in trend terms during both September and October after rising during the previous three months.
October spending was strongest amongst Personal Service Providers – up 1.4 per cent – followed by Amusement and Entertainment – up 1.3 per cent in trend terms.
The Commonwealth Bank Business Sales Indicator also revealed across the states, the fastest sales growth during October occurred in Victoria – up 0.7 per cent – followed by Western Australia, Tasmania and New South Wales – all up 0.5 per cent in trend terms.
“As this month’s Indicator has shown; business sales in each state are starting, albeit slowly, to regain the strength they may have lost during the past 24 months. Indicating to business owners that consumer appetite for goods and services is returning and may continue to increase during the coming months if positive sentiment materialises,” Mr Brewis-Weston said.
“In addition, we hope to see uplift in the Business Sales Indicator across each of the states as we head into the festive season, what is commonly known as a high sales period.”
Mr Brewis-Weston highlighted the importance of the Indicator’s industry and state insights and the important role this type of knowledge will play in the management and operation of Australian businesses.
“The Indicator plays a vital role for businesses across the country. It’s insight into spend patterns by state and industry will prove invaluable for those seeking to improve their sales and see more effective business planning and management,” he said.
“The October Commonwealth Bank Business Sales Indicator highlights a level of optimism for businesses in the coming months as we see sales steady and opportunities for growth emerge.”
The Commonwealth Bank Business Sales Indicator will be reported on a monthly basis and available to the public on the Bank’s website and to media through media release on or around the 20th day of each month.
For more information, please contact:
Phone: (02) 9378 5965
Notes to editors
i. About the Commonwealth Bank Business Sales Indicator
The Commonwealth Bank Business Sales Indicator is calculated by tracking credit and debit card transactions processed through Commonwealth Bank merchant facilities throughout Australia (approximately 30 – 40 per cent of market).
The Commonwealth Bank Spending Business Sales Indicator has been devised to provide a monthly assessment of spending trends in the Australian economy. Currently, the main monthly indicator of spending in the economy is the Australian Bureau of Statistics’ (ABS) Retail Trade release. The main quarterly indicator of spending in the economy is the ABS Household Final Consumption Expenditure (HFCE). A quarterly measure of the Commonwealth Bank Business Sales Indicator has closely tracked the ABS household consumption series over the past three years, highlighting the value of the Commonwealth Bank Business Sales Indicator to track changes in spending across the economy. The Business Sales Indicator is available monthly; broader household consumption figures are only available from the ABS on a quarterly basis.
The Commonwealth Bank Business Sales Indicator includes industry sectors based on international Merchant Category Code (MCC) categories.