The Australian economy has seen the strongest growth in spending in 15 months, according to the latest Business Sales Indicator (BSI) released by the Commonwealth Bank today.
The report, a key monthly indicator of the state of the national and state economies, showed that spending Australia-wide grew 0.6 per cent in trend terms in March. In contrast, spending only lifted at an average rate of 0.2 per cent over the previous five months.
“While the latest improvement in the BSI is encouraging, increased spending ahead of Easter may have played a part in the result. A clearer picture of economy-wide spending should emerge over the next couple of months,” said CommSec Chief Economist Craig James.
“Looking ahead, low interest rates and the wealth effect of rising home prices should support spending. But modest wage growth and uncertainty about the Federal Budget will serve as a brake on sales.”
Spending growth has averaged a 0.3 per cent rise per month in trend terms over the past year. In annual terms, trend sales growth rose from 2.5 per cent to a four-month high of 3.1 per cent in March.
The more volatile seasonally-adjusted BSI rose by 1.6 per cent in March after rising by 1.3 per cent in February. Annual growth stands at 9.9 per cent.
The BSI tracks the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals. The BSI covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines.
17 of the 19 industry sectors rose in trend terms in March.
Then strongest growth in sales was seen in Service Providers (up 1.9 per cent), Government Services (up 1.4 per cent), and Automobiles & Vehicles and Miscellaneous Stores (both up 1.2 per cent). The largest declines were seen in Business Services (down 0.7 per cent) and Retail Stores (down 0.3 per cent).
In annual growth, Automobiles and Vehicles saw the largest increase of 17.1 per cent. Service Providers were up 16.7 per cent, followed by the Hotels and Motels sector with a 15.6 per cent rise.
State by state breakdown
Sales were stronger in all states and territories in March and in annual growth.
The strongest gains were seen in Victoria (up 2.2 per cent), South Australia (up 1.3 per cent) and Tasmania (up 1.2 per cent). These states were followed by Western Australia & Queensland (up 0.9 per cent), the Northern Territory (up 0.6 per cent), and New South Wales (up 0.4 per cent). Spending was flat in the Australian Capital Territory.
Spending has consistently increased in Western Australia for 70 months, for 68 months in South Australia and for 62 months in Tasmania.
In annual terms, the strongest growth was seen in South Australia (up 12.3 per cent). This was followed by Western Australia (up 9.7 per cent), Queensland (up 8.8 per cent), Tasmania (up 8.3 per cent), the Australian Capital Territory (up 8.2 per cent), New South Wales (up 6.2 per cent), Victoria (up 5.3 per cent) and Northern Territory (up 2.8 per cent).
Read the latest Commonwealth Bank Business Sales Indicator.