Mid-market companies are battling but by no means beaten - Commonwealth Bank Future Business Index reveals
Spending lifts in the lead up to Christmas
- Economy-wide spending rebounds in November, lifting by 2.2 per cent in seasonally adjusted terms.
- The less volatile trend estimate of spending rose by 0.3 per cent in November – the fourth straight gain –following on from 0.4 per cent in October.
- At a sectoral level Amusement & Entertainment, Government Services, and Automobiles & Vehicles marked the strongest monthly trend increases.
- At a state level sales rose most in Victoria (up 0.7 per cent) followed by Queensland and NSW (up 0.3 per cent), and South Australia (up 0.1 per cent).
20 December 2012: Economy-wide spending is showing signs of recovery according to the latest Commonwealth Bank Business Sales Indicator (BSI). In seasonally adjusted terms the BSI rose by 2.2 per cent in November, following on from a 1.0 per cent fall in October.
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.
According to Adam Bennett, Executive General Manager, Local Business Banking, Commonwealth Bank, the latest results will be welcome news for many businesses across the country in the lead up to the busy festive trading period.
“Although we have experienced spending volatility over the past six months, the latest results provide businesses with some much-needed good news in the lead up to Christmas.
“In addition to the latest November increase, spending is up 6.6 per cent on a year ago, and hopefully we’ll see this continue throughout the Christmas shopping season. Coming off the back of a tough year for many sectors, it is important that businesses across the country are prepared to make the most of consumer spending over the coming weeks,” said Mr Bennett.
The less volatile trend estimate of spending also rose by 0.3 per cent in November, marking the fourth straight gain and following on from a 0.4 per cent increase in October.
Savanth Sebastian, Economist of the Bank’s broking subsidiary CommSec, believes the November results are a positive indicator for the year ahead, but notes that consumers are still displaying conservative habits.
“Although this year has been marked by spending volatility, economy-wide spending is showing signs of recovery this month. Hopefully this uptick in spending, coupled with positive economic news such as the recent interest rate cut and favourable job data, will help drive consistent spending patterns into the New Year.
“While we have seen a lift in spending we know consumers are still, on a whole, adopting conservative habits. It will be interesting to see how consumers react to this positive news, and the flow-through effect it has across sectors and states during the festive trading period,” said Mr Sebastian.
Industry analysis – spending strongest amongst Amusement & Entertainment and Government Services
Across sectors, 11 of the industry sectors fell in November, up from nine sectors in October. The strongest monthly trend increase in sales occurred in Amusement & Entertainment (up 8.0 per cent), followed by Government services (up 1.6 per cent), Automobiles & Vehicles (up 1.1 per cent) and Transportation (up 0.9 per cent).
Amongst the weakest sectors in November were Service Providers (down 4.9 per cent), Mail Order & Telephone Order Providers (down 3.5 per cent), and Hotels & Motels (down 1.5 per cent).
In annual terms, just four of the 20 industry sectors contracted in November, a similar result to October. Spending fell in Airlines (nfp), Service Providers (down 5.2 per cent), Hotels & Motels (down 4.8 per cent) and Mail Order and Telephone Order Providers (down 4.7 per cent).
At the other end of the scale, spending was strongest at Amusement & Entertainment (up 38.9 per cent) followed by Wholesale Distributors and Manufacturers (up by 22.1 per cent), Retail Stores (up 9.1 per cent), Contracted Services (up by 5.9 per cent) and Miscellaneous Stores (up 5.5 per cent).
State analysis – VIC, QLD and NSW mark biggest gains
Only one of the states and territories recorded weaker sales in trend terms in November: ACT (down 0.1 per cent). Sales were flat in Tasmania, Northern Territory and Western Australia. Sales rose most in Victoria (up 0.7 per cent) followed by Queensland and NSW (up 0.3 per cent), and South Australia (up 0.1 per cent).
The trend BSI has now risen for 17 straight months in Queensland and for 16 straight months in South Australia. Sales haven’t fallen for 18 months in Northern Territory and for 17 months in Western Australia.
In annual terms, no state or territory had sales below a year ago. Strongest growth was posted in South Australia (up 13.4 per cent), followed by ACT (up 9.9 per cent), Queensland (up 8.8 per cent), Northern Territory (up 5.8 per cent) and Victoria (up 5.7 per cent).
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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. The Business Sales Indicator is tracked in seasonally adjusted and trend terms. The overall Index is measured in both seasonally adjusted and trend terms while state and industry data are measured using the less volatile “trend” approach. 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.
(02) 9118 7370