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Economy-wide spending continued to grow in September, although the rate of growth has slowed to a more consistent pace, according to the Commonwealth Bank’s latest Business Sales Indicator (BSI).
In trend terms, the BSI rose 0.3 per cent for the month, down slightly from a 0.4 per cent gain in August and marking the 38th consecutive month of spending growth.
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 September BSI shows modest growth during the month, with the annual growth rate easing to 8.7 per cent — down from 9.2 per cent in August. However, this is still above the 6.3 per cent long-term average growth rate.
Meanwhile, the more volatile seasonally adjusted measure fell 0.7 per cent in September, after a rise of 0.6 per cent the month before. As a result, the seasonally adjusted annual growth rate eased from 9.7 per cent to 9.1 per cent in September.
Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank, said that while the latest BSI reported slower growth, the majority of sectors experienced sales increases throughout the month.
“In September we saw sales grow at a moderate pace across all but one of the states and territories as well as in the majority of industry sectors. Looking forward, we can anticipate further increases in growth as we transition into the holiday trading period where consumer spending is typically strong.
“For businesses, it’s especially important to start building cash reserves or establishing lines of credit now, so they can take full advantage of growth opportunities in the months ahead,” said Mr Bennett.
Craig James, Chief Economist at the Bank’s broking subsidiary CommSec and author of the BSI report, said that although concerns about the global economy and a weaker share market have had an effect on confidence, conditions remain favourable for spending growth to continue into 2015.
“Fundamentally, the economy is sound, with low interest rates, a more competitive currency and a stable job market.
“Business profitability has improved and, in many industries, forward order books are starting to fill. Job advertisements have been consistently higher and more people are looking for and finding work, which should increase household incomes and flow through to sales,” said Mr James.
Service Providers outperform
In 13 out of 19 industry sectors, sales rose or remained stable in trend terms during September, down from 14 in August. For the fourth straight month, the Service Providers sector enjoyed the strongest growth, with spending up 4.3 per cent. Other sectors to record healthy rises included Transportation (up 1.6 per cent), Airlines (up 1.3 per cent) and Miscellaneous Stores (up 0.9 per cent).
In contrast, the Utilities sector fell 1.3 per cent, while Clothing Stores and Automobile/Vehicle rentals each recorded falls of 1 per cent. Nonetheless, annual sales growth remains positive in 16 out of 19 sectors, with five reporting increases of 20 per cent or more over the last year. The Service Providers sector topped the leader board, with a 28.7 per cent lift in sales, followed by Hotels & Motels on 24.4 per cent.
A tale of two territories
September once again saw sales rise across most of the country, with South Australia and Tasmania recording the highest growth rates, both up 0.5 per cent. The Australian Capital Territory also bounced back from recent declines, after sales rose 0.3 per cent during September. However, the Northern Territory lost ground to become the only state or territory with falling sales, down 0.3 per cent.
Overall, the national trend remains positive, with the BSI rising for 39 straight months in Queensland, 31 months in Tasmania, 25 months in NSW, and 24 months in South Australia. As a result, every state and territory except the Australian Capital Territory has seen sales rise over the last 12 months, with South Australia recording a chart-topping 16.2 per cent rise.
About the Commonwealth Bank Business Sales Indicator