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Strongest annual spending growth in over five years
- Economy-wide spending rose for the tenth consecutive month in trend terms in June
- Annual growth lifted in trend terms from 7.6 per cent to a 5½ year high of 8.7 per cent
- 17 industry sectors expanded in trend terms in June
- ACT and NSW record the largest increases in spending across June.
19 July 2013: Economy-wide spending lifted by 1.0 per cent in trend terms in June, pushing annual growth to a 5½ year high of 8.7 per cent, 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.
June marked the tenth consecutive monthly increase in spending in trend terms and the fifth straight month that growth has exceeded 1.0 per cent. The 1.0 per cent trend increase was down from 1.1 per cent in May and the 1.2 per cent gains seen in March and April.
At a sector level, the continued spending recovery broadened to encompass more sectors, with only two out of 19 industry sectors contracting in June.
The more volatile seasonally adjusted measure of sales fell by 2.1 per cent after a 5.4 per cent lift in May – continuing the zigzag movements from the last year. Annual growth now stands at 4.4 per cent in seasonally adjusted terms, down from the 5.8 per cent average pace seen over the last year.
Adam Bennett, Executive General Manager, Local Business Banking, Commonwealth Bank, believes the June BSI results should provide good news for businesses as spending discrepancies between sectors begins to contract.
“Throughout 2013 we’ve seen consistent consumer spending patterns form, with back-to-back sales gains posted. However, what is particularly pleasing for businesses in June is that when you look beyond overall spending figures, the increase in sales is starting to disperse to most sectors. We have seen sales in the Automobiles & Vehicles sector turn positive, and sales in the Mail Order/Telephone Order Providers sector rise for the second month, after months of consistent declines.
“We have now seen back-to-back increases for ten consecutive months. With consumer spending showing signs of momentum, this is a great platform for many businesses as they embark on a new financial year,” said Mr Bennett.
Craig James, Chief Economist at the Bank’s broking subsidiary CommSec, believes the latest results provide a positive sign for many sectors.
“The June results are positive for many sectors. The Retail Stores sector in particular has been performing well, and spending increased again this month by 1.6 per cent. This was potentially buoyed by the weakening AUD, coupled with end of financial year sales, but the overall performance should provide a positive outlook for many retailers.”
“What is promising for businesses is that we are now seeing consistent consumer spending patterns form, independent of external spending incentives or overtly positive economic news,” said Mr James.
Industry Analysis – positive sales posted in Automobiles & Vehicles sector after four months of declines
At an industry level, 17 out of the 19 sectors saw an increase in spending across the month of June, following increases across 16 sectors in May and 15 sectors in April. Encouragingly, sales in the Automobiles & Vehicles sector rose after four months of declines, and sales in the Mail Order/Telephone Order Providers sector rose for the second month after 10 months of declines.
Amusement & Entertainment saw the strongest sales increase, up by 4.0 per cent in June. This was closely followed by Retail Stores (up 1.6 per cent) and Service Providers and Miscellaneous Stores both up 1.3 per cent.
The only two sectors to fall in June were Business Services, down 1.3 per cent, and Transportation, which fell by 0.4 per cent.
State Analysis – ACT records largest lift in spending across June
All states and territories recorded stronger sales in June. Sales rose most in the Australian Capital Territory (up 1.8 per cent), followed by New South Wales (up 1.5 per cent) and South Australia (up 1.1 per cent).
The trend BSI has now risen for 25 months in the Northern Territory, for twenty four straight months in both Queensland and South Australia, for 21 straight months in the Australian Capital Territory and for 15 straight months in Tasmania.
In annual terms, all states and territories posted increases. Strongest growth was posted in the Australian Capital Territory (up 16.4 per cent), followed by South Australia (up 12.7 per cent), New South Wales (up 10.3 per cent), and Tasmania (up 7.9 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 19 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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