Economy-wide sales increased nationwide by 0.3 per cent in October, although it was the lowest level of growth in two years, according to the Commonwealth Bank’s latest Business Sales Indicator (BSI).
The October BSI fits an overall pattern of slower sales growth over the past six months. The October rate compares with 0.4 per cent growth in September, 0.5 per cent growth in August, July and June, and 0.6 per cent growth in May and April.
Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank, said: “While the recent trend of slowing sales growth will be concerning for businesses, the overall picture is a more positive one, with sales having now increased for 39 months consecutively and annual growth consistently above the long-term average.
“It’s important for businesses to go into the festive season with a plan to maximise their performance in this typically busy trading period. Or if your business slows down over Christmas, use the time to prepare a business plan for next year to ensure you capitalise on sales when things pick up,” said Mr Bennett.
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.
Other key findings from the October BSI include:
Craig James, Chief Economist at the Bank’s broking subsidiary CommSec and author of the BSI report, said economic conditions were generally favourable for future sales growth.
“Consumer confidence is good, but by all means not great. But there are signs of improvement in the job market while higher housing prices and construction are serving to underpin spending,” said Mr James.
Across industries, spending fell in just five of the 19 sectors in trend terms in October.
For the fifth month in a row, the strongest sector in October was Service Providers – largely finance and insurance companies (up 4.6 per cent). Other top performers were Transportation (up 2.3 per cent), Airlines (up 1.5 per cent), Hotels & Motels and Wholesale Distributors & Manufacturers (both up 1.0 per cent).
The biggest decline in sales was in the Mail Order/Telephone Order Providers sector (down 3.3 per cent). Also in decline were Government Services (down 1.8 per cent), Automobile/Vehicle rentals (down 0.8 per cent), Utilities (down 0.6 per cent) and Automobile/Vehicle sales (down 0.4 per cent).
State by state analysis
The only state that didn’t see any increase in sales in October was NSW, where sales were unchanged in the month. The flat result in NSW follows generally strong growth over the past 25 months.
Of the other states and territories, leading the gains was the ACT (up 1.7 per cent). South Australia, Western Australia and Tasmania also saw solid gains in growth (all up 0.7 per cent). Victoria came slightly behind them at 0.6 per cent growth, and Queensland achieved 0.5 per cent sales growth.
The trend BSI has now risen for 40 straight months in Queensland, for 32 months in Tasmania, and for 25 months in South Australia. Sales in Victoria have been either flat or higher for 40 consecutive months.
About the Commonwealth Bank Business Sales Indicator