Spending grew strongly across the economy in May according to the latest Commonwealth Bank Business Sales Indicator (BSI) released today.
The report, a key monthly indicator of the national and state economies, showed that spending lifted by 0.8 per cent in May in trend terms with sharp upward revisions to the pace of growth in March and April.
“Economy-wide spending rebounded smartly in May. As we noted last month, the timing of Easter and school holidays may have affected spending levels and a clearer picture of economy-wide spending would emerge with more data,” said CommSec Chief Economist Craig James.
“That now appears to be the case with data showing solid sales growth in May across all states and territories and industry sectors. This is very encouraging economic news in the face of some recent gloomy pronouncements.”
Spending growth has averaged 0.7 per cent a month over the past year. The annual trend growth in sales lifted from an upwardly-revised 7.7 per cent in April to 8.5 per cent in May.
The more volatile seasonally adjusted measure of the BSI rose by 2.2 per cent in May – the strongest gain in six months and second strongest gain in 13 months.
“We’re seeing a continued trend towards consumers spending on experiences, with notable growth seen across the Airline, Amusement and Entertainment sectors as Australians choose weekends away, concerts and going to the cinema over traditional retail,” said James.
“The travel sector is buoyant. More people are coming to Australia and more Aussies are travelling. And that makes sense with affordability of travel reportedly at the best levels on record.”
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.
18 of the 19 industry sectors rose in trend terms in May.
The biggest lift in sales occurred in the Amusement and Entertainment sector (up 4.0 per cent) followed by Transportation (up 1.5 per cent) and Airlines and Miscellaneous Stores (both up 1.2 per cent).
Both the Amusement and Entertainment and Airline sectors also saw strong annual growth. Amusement and Entertainment was up 25.7 per cent and Airlines up 18.1 per cent.
The weakest gains in May occurred in Mail Order/Telephone Order Providers (down 0.1 per cent), while spending at Automobiles and Vehicles was largely flat.
In annual terms in May, only two of the 19 industry sectors contracted. Mail Order/Telephone Order Providers were down 9.4 per cent and Transportation down 1.7 per cent.
State by state breakdown
Sales were stronger across all states and territories in May and in annual terms.
The strongest growth in spending was seen in Queensland (up 1.1 per cent), followed by Victoria (up 0.9 per cent), New South Wales and the Northern Territory (both up 0.8 per cent), Tasmania (up 0.7 per cent), South Australia (up 0.6 per cent), Western Australia (up 0.5 per cent), and the Australian Capital Territory (up 0.2 per cent).
In annual terms, the strongest growth was seen in Queensland and South Australia (up 9.8 per cent), Victoria (up 9.0 per cent), Tasmania (up 8.9 per cent), Western Australia (up 8.1 per cent), New South Wales and the Australian Capital Territory (up 7.6 per cent) and Northern Territory (up 5.0 per cent).
The Commonwealth Bank Business Sales Indicator (BSI) is calculated by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities throughout Australia.
The BSI has been devised to provide a monthly assessment of spending trends in the Australian economy (covering 19 industry sectors and all Australian states and territories) and is available to the public on the Bank’s website and to the media on or around the 20th day of each month.
Credit and debit card transactions can be volatile on a month-to-month basis, affected by seasonal and irregular factors. The BSI is tracked in seasonally adjusted and trend terms. The overall BSI is measured in both seasonally adjusted and trend terms while state/territory and industry data are measured using the less volatile ‘trend’ approach. The seasonally adjusted and trend estimates of the BSI results are derived by applying a statistical program.
The monthly BSI has been devised to provide a more timely assessment of spending trends in the economy. The main monthly indicator of spending in the economy is the Australian Bureau of Statistics’ (ABS) Retail Trade release. However these statistics only cover spending at retail establishments, and exclude spending at a raft of other businesses.
The BSI includes transactions made at traditional retail establishments such as supermarkets, clothing stores, cafes and restaurants and as such is more comparable to the ABS Household Final Consumption Expenditure, which is released on a quarterly basis. The BSI also covers businesses such as airlines, car dealers and utilities, such as water and electricity companies, as well as motels, business, professional and government services and wholesalers.
The BSI includes industry sectors based on the International Merchant Category Code (MCC) categories. MCC is a four-digit number assigned to a business when the business first starts accepting cards as a form of payment.