Sales at Australian businesses continue to grow at a solid pace in July, according to the latest Commonwealth Bank Business Sales Indicator (BSI).
Economy-wide spending grew by 0.6 per cent in trend terms, which is encouraging news for retailers. Despite experiencing slightly slower growth compared to previous months1, the latest sales results are positive and indicate businesses are still embracing Government stimulus measures.
While monthly trend spending eased, annual growth remained firm, with sales up 7.7 per cent in July – well above the decade-average of 5.3 per cent. The seasonally adjusted measure of sales also rose 1.2 per cent in July, the fastest growth rate in four months, to be up 7.4 per cent over the year.
Craig James, Chief Economist at CommSec and author of the BSI report, said that despite the slightly slower sales growth experienced in July, the outlook was encouraging.
“Spending is still growing at an above-average pace, consumer confidence is also above short and longer-term averages and the outlook for the job market has improved. The Reserve Bank recently stated that the unemployment rate has probably peaked.”
Claire Roberts, Executive General Manager, Local Business Banking, Commonwealth Bank said: “The BSI shows we’re still experiencing strong year-on-year sales growth, despite tougher global economic conditions. As the rate of growth is beginning to slow and consumer confidence is measured, it’s an important time for businesses to ensure they have strategies in place to manage any further fluctuations over the coming months.”
At an industry level, sectors which experienced the strongest growth in July were Clothing Stores (up 1.8 per cent) and Automobiles & Vehicles (up 1.5 per cent). And Clothing Stores experienced the fastest spending growth in over six years.
The Business Services sector continued to post its highest monthly growth rates in 18 months, rising 0.8 per cent in July following a 1.4 per cent boost in both April and May and 1.1 per cent lift in June.
Across all sectors, spending fell in just three of the 19 industry sectors measured in trend terms in July. These included: Airlines (down 3.7 per cent); Mail Order/Telephone Order Providers (down 6.0 per cent) and Professional Services & Membership Organisations (down 0.8 per cent).
In annual terms, sectors to record the strongest growth included: Hotels & Motels; Miscellaneous Stores; Personal Service Providers; Amusement & Entertainment; and Wholesale Distributors & Manufacturers.
STATE BY STATE ANALYSIS
Sales rose in all states and territories in July, aside from Northern Territory which was down by just under 0.1 per cent. Australian Capital Territory recorded the highest sales growth (up 1.0 per cent), followed by Queensland, South Australia and Tasmania (all up 0.7 per cent), Western Australia (up 0.6 per cent), New South Wales (up 0.4 per cent) and Victoria (up 0.3 per cent).
In annual terms, growth was strongest in the Australian Capital Territory, rising 16.0 per cent. South Australia and Western Australia both recorded an 8.1 per cent rise, with Queensland up 7.7 per cent, Tasmania up 7.4 per cent, and Victoria up 1.5 per cent. Meanwhile only New South Wales and Northern Territory had sales below a year ago in July (down 5.5 per cent and 6.4 per cent respectively).
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.
Find out more about the latest Commonwealth Bank Business Sales Indicator.
1Results of 0.7 to 0.9 per cent trend growth recorded per month from March – June 2015
About the Commonwealth Bank Business Sales Indicator