Australia’s economy-wide consumer spending in December grew faster than its long-term average monthly increase, taking annual growth to a nine-month high, according to the Commonwealth Bank Business Sales Indicator (BSI).
That gives room for the Reserve Bank of Australia to possibly keep the official cash rate on hold “for the foreseeable future”, CommSec chief economist Craig James said in a research note today.
“The economy is accelerating out of a flat spot experienced in mid-2016,” he said. “The Reserve Bank would be heartened by the latest data, giving policymakers more reasons to stay on the interest rate sidelines.”
The outlook for spending “remains favourable” as interest rates stay low, while rising home prices boost wealth and job vacancies jumped to near five-year highs, James added.
In addition, employment data released yesterday showed that the country added 95,000 full-time jobs in the three months to December, the strongest quarterly growth in more than six years.
The CommBank BSI tracks the value of credit and debit card transactions processed through the bank’s merchant facilities, measuring spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines.
The gauge rose 0.7% in trend terms in December, ahead of the long-term average monthly growth of 0.4%, according to the research note. That followed average monthly increase of 0.8% in the previous three months, and a monthly average of 0.3% over the first eight months of 2016.
Annual trend growth in sales expanded from 5.2% to 5.4% in December, the strongest annual growth rate in nine months.
Sales increased in all states and territories in Australia, except Victoria, which fell 0.5%. Meanwhile, 17 of the 19 industry sectors grew in trend terms last month, similar to October and November.
“Interestingly the large retail stores category showed weakness in December but that was outweighed by gains in spending across a raft of other industry sectors,” said James.