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Australian consumers still cautious of economic conditions

19 February 2010: Spending by Australian consumers increased marginally in January from December 2009, according to the latest Commonwealth Bank Business Sales Indicator (BSI)(i).

The BSI, which tracks the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, rose by 0.1 per cent (in trend terms) over the month of January, the weakest growth rate in 14 months. Despite the small month-on-month increase, the BSI currently stands 5.4 per cent higher than the corresponding period a year earlier.

Executive General Manager of Local Business Banking at the Commonwealth Bank, Symon Brewis-Weston said, despite the year-on-year improvement, you would expect retail trading conditions to be more buoyant in the first month of the New Year.

“Although we’ve seen a small lift in the spending habits of Australians over the month of January, the result isn’t what you’d expect to see over what’s traditionally one of the most popular sale times of the year. Consumers are still cautious of what the economic future holds following the global financial crisis, and they continue to keep a tight rein on their purse strings.”

According to Craig James, Chief Economist at CommSec and author of the BSI, the cautious attitudes of consumers highlighted by the BSI in January is further evidence that the Reserve Bank of Australia’s (RBA) made the right decision in leaving interest rates on hold in February.

“While businesses and consumers are more confident than they were a year ago, they’re still spending very carefully. So it was understandable that the Reserve Bank left rates on hold earlier this month. And while interest rates are on track to move higher over the year, it is clear that the RBA will tread carefully as long as conservative spending behaviour is maintained."

Industry Analysis

Of the 20 industries tracked in the BSI, spending was strongest in the Repair Services sector, increasing 1.1 per cent over the month of January (in trend terms).


+ 1.1%

Repair Services

+ 1.0%

Professional Services

+ 1.0%

Service Providers

+ 0.7%

Transportation Services

According to Mr James, the result isn’t surprising given that Australian consumers still have the shock of the global financial crisis uppermost in their minds.

“The fact that repair service businesses have been doing well in recent months further supports the view that consumers have become more conservative. It appears that many people would prefer to get their appliances fixed rather than going to the extra expense of updating or replacing them.”

In contrast, the weakest sector in January was Mail Order and Telephone Order Providers (down 1.1 per cent), followed by Government Services and Retail Stores (both down 1.0 per cent).

State/Territory Analysis

The BSI found that all states and territories, apart from Victoria where spending eased by 1.0 per cent, recorded a lift in sales in January. The Northern Territory recorded the largest increase in sales (0.6 per cent in trend terms), with New South Wales and Queensland not far behind, both rising by 0.4 per cent.  

When comparing the results to the same period a year earlier, the BSI found that spending increased the most in the Australian Capital Territory (up 11.5 per cent in trend terms), followed by the Northern Territory (up 7.8 per cent). At the other end of the scale, the spending gauge was weakest in Western Australia (up 1.0 per cent) and Victoria (up 2.5 per cent).

- ENDS -


Kate Powditch
Commonwealth Bank
Phone: (02) 9118 1667

i. About the Commonwealth Bank Business Sales Indicator

  • The 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 Business Sales Indicator has been devised to provide a monthly assessment of spending trends in the Australian economy and is available to the public on the Bank’s website and to the media on or around the 20th day of each month.
  • 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 Business Sales Indicator has closely tracked the ABS household consumption series over the past three years, highlighting the value of the 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 Business Sales Indicator includes industry sectors based on international Merchant Category Code (MCC) categories.

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