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Economic recovery gathers pace as spending lifts in January
- Economy-wide spending lifted in January, rising by 1.9 per cent in seasonally adjusted terms.
- The underlying spending trend also rose, marking the fifth straight gain in sales and the strongest increase in 10 months.
- In annual terms, no state or territory had sales below a year ago.
20 February 2013: Australian consumers and businesses have begun 2013 on a positive note, with economy-wide spending posting solid growth, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
According to the BSI, spending increased by 1.9 per cent in seasonally adjusted terms in January, after falling by 1.3 per cent in December.
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.
Spending grew by 0.8 per cent in trend terms in January, the fifth consecutive monthly increase in spending and the strongest increase in 10 months. Additionally, annual growth stands at 6.4 per cent.
Adam Bennett, Executive General Manager, Local Business Banking, Commonwealth Bank, believes the latest results provide businesses with a more positive outlook for the year ahead.
“While Christmas spending did not have the impact many businesses had hoped for, the results of January spending offered some positive news. The results show that although spending patterns remain erratic, consumers are still willing to spend and confidence is heading in the right direction.
“The good news is we also saw solid annual increases in sectors such as amusement and entertainment and retail, which heavily rely on the busy festive period.
“As businesses look to the year ahead, it is important to continue to focus on efficiency and have plans in place to navigate future fluctuations in spending habits and consumer sentiment,” said Mr Bennett.
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, believes the latest results demonstrate that consumers are making solid steps in the right direction.
“The lift in spending in January coincided with post-Christmas sales, suggesting that consumers are more inclined to spend when goods or services are discounted. However, we have seen positive indicators for some time now, with the underlying trend pattern ticking upward for the past five months.
“Hopefully as the international picture begins to brighten we will see further gains in spending in coming months,” said Mr James.
Industry analysis – Service Providers marks strongest monthly trend increase
The strongest monthly trend increase in sales occurred in Service Providers (largely financial firms) (up 3.7 per cent), followed by Transportation (up 2.0 per cent), Government Services (up 1.2 per cent) and Airlines (nfp).
Only three of the industry sectors fell in trend terms in January, down from six sectors in December and eight sectors in November.
Amongst the weakest sectors in January were Mail Orders & Telephone Order Providers (down 1.6 per cent), Professional Services & Membership Organisations (down 0.4 per cent) and Hotels & Motels (down 0.1 per cent).
In annual terms, spending was notably higher at Amusement & Entertainment (nfp) together with Wholesale Distributors and Manufacturers (up by 17.3 per cent), Retail Stores (up 7.5 per cent), Transportation (up by 7.1 per cent) and Automobiles & Vehicles (up 6.4 per cent). Just four of the 20 industry sectors contracted in January, a similar result to both November and December. Spending fell in Airlines (nfp), Mail Orders & Telephone Order Providers (down 5.7 per cent), Hotels & Motels (down 2.5 per cent) and Automobile/Vehicle Rentals (down 0.6 per cent).
State analysis – Sales rose most in ACT
The trend BSI has now risen for 20 straight months in the Northern Territory, for 19 straight months in Queensland, for 18 straight months in South Australia, for 16 straight months in ACT and for nine straight months in Tasmania.
In annual terms, no state or territory had sales below a year ago. Strongest growth was posted in ACT (up 12.1 per cent), followed by South Australia (up 10.0 per cent), followed by Queensland (up 7.7 per cent), Tasmania (up 6.1 per cent) and Western Australia (up 5.7 per cent).
None of the states and territories recorded weaker sales in trend terms in January. Sales rose most in the ACT (up 1.7 per cent), followed by Western Australia (up 0.9 per cent), NSW, Tasmania and Victoria (each up 0.8 per cent), Queensland (up 0.4 per cent), Northern Territory (up 0.3 per cent) and South Australia (up 0.2 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.
- 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.
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