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Spending up 10 per cent on a year ago, marking the biggest annual gain in over four years

Media release

CommBank can

Media release

Spending up 10 per cent on a year ago, marking the biggest annual gain in over four years

  • Business Sales Indicator (BSI) rises by 2.5 per cent in seasonally adjusted terms in June
  • Spending is up 10.1 per cent on a year ago in seasonally adjusted terms – the biggest annual gain in over four years
  • QLD marks 12th straight month of trend BSI gains; SA, NSW, WA and VIC mark 11th straight month of trend BSI gains
  • Service Providers, Business Services, Wholesale Distributors & Manufacturers see strongest monthly trend increases, with Aviation and Transportation amongst weakest sectors in June

 

20 July 2012: Economy-wide spending posted solid growth in June, lifting by 2.5 per cent in seasonally adjusted terms, according to the latest Commonwealth Bank Business Sales Indicator (BSI). In seasonally adjusted terms spending is now also up 10.1 per cent on a year ago – the biggest annual gain in over four years.

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 June BSI recorded the sixth increase in sales in the past eight months, and follows on from a 2.1 per cent increase in seasonally adjusted terms in May. The sharp lift in seasonally adjusted estimates is also beginning to filter through to trend estimates, with the BSI rising by 0.7 percent in trend terms in June, after a 0.8 per cent rise in May. In annual trend terms the BSI is up 8 per cent on a year ago.

According to Matt Comyn, Executive General Manager, Local Business Banking, Commonwealth Bank, these results should be welcomed by Aussie businesses.

“We know the patchy nature of the economy means businesses are continuing to be conservative. However, what these results tell us is that consumers are taking tentative steps in the right direction. Small surges in consumer sentiment can result in spending increases, which is what we have seen throughout the year, and again in the June results.  

“While these improvements are gaining traction, consumer confidence still remains fragile. This, coupled with a competitive landscape, means businesses should remain focused on moving forward,” said Mr Comyn.

Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, added the June results highlight that consumers are opening their wallets.

“It appears the stimulus provided by the RBA’s back-to-back rate cuts, and the Federal Government’s household assistance package, has provided a sizeable boost to economy-wide spending. The improvement in household budgets has enticed consumers to spend more freely, and businesses across an array of sectors have benefitted.

“As we’ve seen in past reports, we know the volatility experienced overseas is impacting  on the confidence of consumers and their willingness to spend. However, spending has increased significantly in the past year, and we have now experienced 11 consecutive months of sales growth in trend terms. These results show that despite the stop-start nature of the economy, the recovery is continuing to move forward.”

 

Industry analysis 

Across sectors, two of the industry sectors fell in June, in line with both March and April. The strongest monthly trend increase in sales occurred in the Service Providers sector (up 8.1 per cent), followed by Business Services (up 3.1 per cent), Wholesale Distributors & Manufacturers sector (up 2.9 per cent), Mail Order & Telephone Order Providers (up 2.8 per cent), and Contracted Services (up 1.1 per cent).

In annual terms, two of the 20 industry sectors contracted in June, a similar result to May. The weakest sector was Hotels & Motels (down 4.9 per cent). At the other end of the scale, spending was strongest at Service Providers (up 29.1 per cent) followed by Wholesale Distributors & Manufacturers (up 27.4 per cent), Mail Order/Telephone Order Providers (up 21.6 per cent), Amusement & Entertainment (up 18.2 per cent), Retail Stores (up 16.0 per cent) and Clothing Stores (up 11 per cent).

 

State analysis – all States record sales growth in June

The trend BSI has now risen for 12 straight months in Queensland and for 11 straight months in South Australia, NSW, Western Australia and Victoria. None of the states and territories recorded weaker sales in trend terms in June. The strongest result was in the ACT (up 2.1 per cent), followed by South Australia and Western Australia (both up 1.2 per cent), Queensland (up 0.9 per cent), Northern Territory (up 0.7 per cent), Victoria (up 0.6 per cent), NSW (up 0.5 per cent), and Tasmania (up 0.1 per cent).

In annual terms, no state or territory had sales below a year ago. Strongest growth was posted in South Australia (up 14.7 per cent), followed by the ACT (up 12.5 per cent), Queensland (up 11.4 per cent) and Western Australia (up 11.3 per cent). After 22 months of declines, sales in NSW have now risen in annual terms for the past three months.

 

-ENDS-

 

For more information please contact:

Kate Dudman
Associate Public Relations Advisor
(02) 9118 7370
kate.dudman@cba.com.au

 

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 seasonally adjusted and trend estimates of the BSI results are derived via the SEASABS statistical program from the Australian Bureau of Statistics.
  • 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.

 

 

Media contact:

Kate Dudman
(02) 9118 7370
kate.dudman@cba.com.au