Tough trading times for businesses as wallets close

Media release

CommBank can

Media release

Tough trading times for businesses as wallets close

  • Business Sales Indicator (BSI) falls by 0.4 per cent in seasonally adjusted terms in August
  • Spending remains up 3.5 per cent on a year ago but down on 10.1 per cent increase in the year to June
  • Industry weakness spreads with 10 sectors contracting in August; Mail Order & Telephone Providers and Wholesale Distributors & Manufacturers show continued positive gains. Government Services and Transportation fall
  • Spending in NSW, VIC and WA slips in August; other States remain positive


20 September 2012: Following a pronounced fall in economy-wide spending in July, consumer behaviour has continued to weigh on business sales performance in August, 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 fell by 0.4 per cent in seasonally adjusted terms in August, following a 5.4 per cent decline in July.

According to Gary McGrath, Acting Executive General Manager for Local Business Banking, Commonwealth Bank, the continued slide in spending is indicative of today's consumer.

"The latest BSI is demonstrating that an already cautious consumer is moving into more conservative territory," said Mr McGrath.

"Even though our economy is in good shape, consumers overall don’t see the need to spend and they aren't being given any reason to do so, meaning it's more than likely they will continue to hold on to their money. This is also characterised by the fact that spending on "experiences" – something that has been far more prominent – has also fallen, such as in the Amusement and Entertainment space, which had been a strong performer until recently."

"What this means for businesses is that they need to ensure they are well prepared to continue dealing with a more absent consumer. That includes reviewing their business models and focusing on areas like productivity and efficiency to ensure they can control costs and maintain a healthy balance sheet."

Craig James, Chief Economist of the Bank's broking subsidiary CommSec and author of the BSI, said the case for further monetary stimulus had been advanced after the latest disappointing results.

"We are facing a strong uphill battle when it comes to getting consumers back on the spending path," said Mr James.

"Sales performance is struggling and clearly something is needed to encourage further spending throughout the economy. Even in the resources-rich state of Western Australia we have been witnessing a gradual softening in sales figures since earlier in the year, demonstrating the longer-term effects of weak consumer confidence."

Industry analysis – weakness spreads

Across sectors, 10 of the industry sectors fell in August, up from seven sectors in July. The strongest monthly trend increase in sales occurred in Mail Order & Telephone Order Providers (up 1.3 per cent), Wholesale Distributors and Manufacturers (up by 1.1 per cent) and Clothing Stores (up 0.8 per cent). Among the weakest sectors in August were Government Services (down 1.7 per cent), Transportation and Automobile & Vehicles (both down 1.4 per cent), and Airlines (nfp).

In annual terms, four of the 20 industry sectors contracted in August, up from three sectors in July. Among the sectors recording declines were Airlines and Hotels & Motels. At the other end of the scale, spending was strongest at Wholesale Distributors and Manufacturers (up by 26.1 per cent), Mail Order & Telephone Order Providers (up 21.8 per cent) and Service Providers (up by 17.5 per cent).

State analysis – NSW, VIC and WA see negative sales growth yet positive news for NT & QLD

Three of the states and territories recorded weaker sales in trend terms in August. Sales in NSW fell by 1.0 per cent while sales fell 0.4 per cent in Victoria and by 0.1 per cent in Western Australia. The strongest results were in Northern Territory (up 0.9 per cent), South Australia and Tasmania (both up 0.7 per cent) followed by Queensland and the ACT (both up 0.1 per cent). The trend BSI has now risen for 15 straight months in Northern Territory, for 14 straight months in Queensland, for 13 straight months in South Australia and 11 straight months in the ACT.

In annual terms, no state or territory had sales below a year ago. Strongest growth was posted in South Australia (up 16.0 per cent), followed by ACT (up 11.3 per cent), Queensland (up 10.1 per cent), Northern Territory (up 8.4 per cent) and Western Australia (up 7.8 per cent).

"The soft spending figures are in line with other data showing conservative consumer behaviour, including the fact that the average credit card balance is up by just 0.2 per cent on a year ago and data showing that the use of debit cards continues to surge," said Mr James. "It's these sorts of statistics that businesses will be keeping a close eye on in order to understand today's smart consumer; those that can adapt and tailor their offers for these individuals are those that will ultimately still perform strongly in this market."



For more information please contact:

Tim Mullen
Public Relations Advisor
D: 02 9118 1667
M: 0424 141 483


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:

Tim Mullen
D: 02 9118 1667
M: 0424 141 483