Economy-wide spending rose steadily in March to record a 19th straight month of growth, according to the Commonwealth Bank’s latest Business Sales Indicator (BSI). In trend terms, the BSI rose 0.6 per cent for the month, down slightly from the 0.7 per cent rise recorded in February.
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. The March BSI shows sales continuing to expand at a pace just above the long term monthly average of 0.5 per cent. Similarly, while the annual growth rate edged lower to 9.8 per cent, down from 10.4 per cent in February, it was still well above the long term average of 6.2 per cent.
The more volatile seasonally adjusted BSI measure bounced back to post a 0.6 per cent rise in March, after falling 0.3 per cent in February. But that wasn’t enough to stop the seasonally adjusted annual growth rate slipping from 10.7 per cent to 9.7 per cent in March.
“This is a good, solid result, with sales continuing to grow at a sustainable rate. It shows that business conditions remain largely positive around the country, with almost all regions and industries experiencing healthy spending growth,” said Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank.
“But while the overall trend figure is up, sales continue to show a high degree of seasonal volatility. For business owners, that requires a continued focus on cash flow and strong financial management,” said Mr Bennett.
Craig James, Chief Economist at the Bank’s broking subsidiary CommSec and author of the BSI, said economic conditions are increasingly positive, underpinning further growth in the future.
“The employment market has been outperforming all expectations, with 88,000 new jobs created in the first three months of 2014. Combined with sustained low interest rates and the wealth effect of rising property prices, that’s likely to see consumers continuing to spend confidently,” said Mr James.
Amusement & Entertainment spending up strongly
Seventeen out of 19 industry sectors saw sales rise in trend terms during March, although there were significant differences between sectors. Amusement & Entertainment businesses enjoyed the largest rises, with spending up 4.2 per cent over the month. Professional Services & Membership Organisations recorded a 2.0 per cent rise in sales in March, the second highest result.
Only two industry sectors recorded declines in spending across March - Airlines and Automobile & Vehicle Rentals.
In annual terms, the Amusement & Entertainment sector has been the top performer for the past year, with spending up more than 60 per cent since March 2013. In contrast, Mail Order & Telephone Order providers experienced the largest annual spending drop, with sales down 3.9 per cent over the year.
Queensland outperforms again
Sales were up across the country in March, with only the Australian Capital Territory (ACT) experiencing a fall. Queensland once again posted the strongest result nationally, recording a rise of 1.0 per cent. New South Wales and Tasmania tied for second place, with increases of 0.8 per cent each.
However, spending in the ACT continued to contract sharply, with a drop of 5.5 per cent in trend terms — the fourth month in a row that the ACT has seen falls of 5 per cent or more. As a result, spending in the ACT fell 22.4 per cent over the last 12 months in trend terms.
Elsewhere, annual sales have risen strongly, with every other state or territory enjoying healthy annual spending growth. South Australia remains the clear leader, with growth of 29.8 per cent over the year in trend terms, but Tasmania (10.9 per cent) and the Northern Territory (10.5 per cent) have also recorded double-digit rises over the last 12 months.
About the Commonwealth Bank Business Sales Indicator