Business sales up again, posting best result in two years

  • Business Sales Indicator increases by 0.2 per cent in trend terms
  • Sector picture improves with four of the 20 industry sectors contracting in September, down from seven in August
  • Strongest performing sector Wholesale Distributors & Manufacturers; Utilities weakest
  • NT and TAS record positive gains; WA and ACT fall


20 October 2011: Business sales showed continued signs of improvement in September, posting the best result in two years, according to the latest Commonwealth Bank Business Sales Indicator (BSI).

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 0.2 per cent in September.

According to Matt Comyn, Executive General Manager, Local Business Banking, Commonwealth Bank, the latest figures are a welcome result, with consumers beginning to relax their grip on their purse strings.

“Last month we noted that brighter times may lie ahead for Australian businesses and it’s pleasing to see that the figures for September have given us the best result we have seen in almost two years,” said Mr Comyn.

“This is the first positive increase witnessed for some time and the fact that the number of sectors reporting weaker sales has also eased is good news for Australian businesses.”

Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, said the September numbers demonstrated that there were some good signs of momentum building in consumer spending.

“In trend terms the BSI recorded a rise of just over 0.2 per cent in September and that number has been consistently improving over the past few months,” said Mr James.

“Consumers look to be growing tired of holding back their cash and, although they remain cautious, spending activity appears to be picking up.”


Industry analysis – sector weakness contracts

Four sectors contracted in September, down from seven in August and eight in July. The weakest sector was Utilities down 0.4 per cent in September, followed by Mail Order/Telephone Order providers and Clothing Stores both down 0.2 per cent.

The strongest of the sectors was Wholesale Distributors & Manufacturers, up 0.9 per cent in trend terms in September, followed by Business Services and Repair Services (both up 0.8 per cent), and Transportation (up 0.7 per cent). Importantly, September also saw the Automobile & Vehicles sector return to growth (up 0.4 per cent), finally shrugging off the effects of the Japanese tsunami which disrupted sales from March to July.


State / Territory analysis – overall performance continues to strengthen

Three of the states and territories recorded weaker sales in trend terms in September, down from four in August and five in July. The weakest result was in Western Australia (down 0.6 per cent) followed by ACT (down 0.4 per cent) and South Australia (down 0.2 per cent). The ACT had shown consistent growth over the eight months to May before flattening in June and then falling from July to September.

Of the other states and territories, strongest was Northern Territory (up 1.0 per cent) followed by Tasmania (up 0.5 per cent) and New South Wales (up 0.3 per cent), the latter State seeing the strongest reading in ten months. Sales were flat in Queensland.

“The latest BSI is important as we are starting to see some strength in the numbers and a better result more broadly in the Australian economy,” said Mr James. “Consumers are also likely to be buoyed by recent news from the RBA, which has given us some of the strongest signs yet of a potential rate reduction in November.”

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About the Commonwealth Bank Business Sales Indicator

  • The Commonwealth Bank Business Sales Indicator is calculated by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities throughout Australia (approximately 30 per cent of the market).
  • The Business Sales Indicator has been devised to provide a monthly assessment of spending trends in the Australian economy (covering 20 industry sectors and all Australian states and territories) and is available to the public on the Bank’s website and to the media on or around the 20th day of each month.
  • Credit and debit card transactions can be volatile on a month-to-month basis, affected by seasonal and irregular factors. To better gauge the direction and changes of spending across the economy, the Business Sales Indicator is tracked in trend terms.
  • The monthly Business Sales Indicator has been devised to provide a more timely assessment of spending trends in the economy. The main monthly indicator of spending in the economy is the Australian Bureau of Statistics’ (ABS) Retail Trade release. However these statistics cover just spending at retail establishments, and exclude spending at a raft of other businesses.
  • The Business Sales Indicator includes transactions made at traditional retail establishments such as supermarkets, clothing stores and cafes & restaurants and as such is more comparable to the ABS Household Final Consumption Expenditure released on a quarterly basis. The Business Sales Indicator also covers businesses such as airlines, car dealers and utilities such as water and electricity companies as well as motels, business, professional and government services and wholesalers.

The Business Sales Indicator includes industry sectors based on the International Merchant Category Code (MCC) categories. MCC is a four-digit number assigned to a business when the business first starts accepting cards as a form of payment. Refer to Table 1 for the MCC listing