Good news for business, with sales up again in April, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
Good news for business, with sales up again in April
- Spending rose for the eighth straight month in April, rising by 0.5 per cent in trend terms
- Annual growth in spending stands at 4.9 per cent in trend terms
- South Australia records largest increase in spending across April.
20 May 2013: Business sales continued to strengthen across the month of April, lifting for the eighth straight month, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
According to the BSI, economy-wide spending grew by 0.5 per cent in trend terms in April, matching the gain in March, following a 0.6 per cent increase in February. Over the past eight months sales have lifted on average by 0.6 per cent a month, taking the annual growth in spending to 4.9 per cent.
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.
In seasonally adjusted terms, a measure which tends to be more volatile, sales fell for the first time in four months, with spending down by 0.3 per cent in April. Annual growth now stands at 5.6 per cent in seasonally adjusted terms, down from 5.8 per cent in March.
According to Adam Bennett, Executive General Manager, Local Business Banking, Commonwealth Bank, the increase in consumer spending should give a much needed boost to business confidence.
"With spending increasing for the eighth consecutive month in trend terms, it’s clear that consumer confidence is on the rise and businesses should look to capitalise on consumers’ willingness to spend. We know a lot of business owners are treading cautiously at the moment due to concerns around the broader economy, but the latest BSI results should provide further comfort that market conditions are improving."
"Furthermore, the April BSI results don’t factor in the latest reduction in interest rates announced by the Reserve Bank this month, so it’s more than likely we’ll see a further uplift in spending patterns across the month of May now that rates are at historic lows. This should give consumer confidence another boost and offer a promising outlook for businesses across the country," said Mr Bennett.
Craig James, Chief Economist of the Bank’s broking subsidiary CommSec and author of the BSI, believes the latest results provide a good indication that consumer confidence has turned a corner. < /p>
"The fact is, we’ve seen consumer spending steadily increase over the past eight months, which is good news for business owners. Despite the wider economy not travelling at top speed, the latest BSI results certainly indicate business conditions are improving."
"Another sign of encouragement is that most industries experienced an increase in sales over the month of April. The increase was led by Service Providers and the Utilities sector, which both grew by 1.3 per cent in trend terms. In addition, a number of other sectors also showed signs of improvement, including the 1.0 per cent growth recorded by Professional Services Organisations," said Mr James.
Sector Analysis – Government Services sees strongest gain in almost four years
Looking at the industry results, 14 of the 20 sectors experienced an increase in sales across the month, compared to 13 in March. The strongest monthly trend increases were reported by Service Providers and Utilities (both up 1.3 per cent). Amongst the weakest sectors in April were Mail Orders & Telephone Order Providers (down 5.3 per cent), Amusement & Entertainment (down 0.9 per cent) and Business Services (down 0.8 per cent).
From an annual growth perspective, 14 of the 20 sectors recorded a rise in year-on-year sales in April. A standout performer was the Government Services sector, which recorded the strongest annual gain in almost four years.
State Analysis – South Australia records largest increase in spending across April
All states and territories recorded a rise in sales across the month of April. The strongest monthly gains were experienced in South Australia (up 1.3 per cent) and Western Australia (up 0.7 per cent), followed closely by New South Wales (up 0.6 per cent).
In annual terms, no state or territory had sales below a year ago. Strongest growth was posted in South Australia (up 12.4 per cent), followed by the Australian Capital Territory (up 9.7 per cent), Tasmania (up 8.0 per cent) and Queensland (up 7.1 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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