Thursday, 20 October 2016: The latest Commonwealth Bank Business Sales Indicator (BSI) has recorded a 0.7 per cent increase in trend terms for September, continuing its upward trajectory and matching its strongest gain in 17 months. 

“As we head into the end of the year, the latest data shows spending has not only recovered after the uncertainty associated with the Brexit vote and the federal election, but the gains are broad-based,” CommSec Chief Economist Craig James said. 

Over the first half of 2016, economy-wide spending grew on average by 0.2 per cent a month, however, it has strengthened over the last three months, lifting by 0.4 per cent in July, 0.6 per cent in August and 0.7 per cent in September.

“This month’s business sales indicator matches the strongest result recorded in 17 months and to find a stronger result, you would have to look back two and a half years,” Mr James said.

Annual sales growth has been steadily increasing since the four-year low of 4.3 per cent recorded in July and sits at 4.7 per cent in September.

The more volatile seasonally adjusted BSI rose by 0.6 per cent in September after rising by 1.1 per cent in August.

Industry analysis

Building on growth recorded in July and August, spending in 16 of 19 industry sectors rose in September. The strongest gains were recorded in Amusement and Entertainment (up 1.8 per cent), followed by Hotels & Motels (up by 1.2 per cent).

The largest fall in spending was seen in Business Services which was down 2.3 per cent in September.

In annual terms in September, four of the 19 industry sectors contracted: Airlines, Transportation, Business Services and Automobiles & Vehicles.

Sectors with the strongest annual growth in September continue to include: Wholesale Distributors & Manufacturers (up 14 per cent), Mail Order/Telephone Order Providers (up 14 per cent) and Hotels & Motels (up 13.7 per cent).

State-by-state analysis

The Australian Capital Territory and the Northern Territory were again the only states to record a fall in sales growth over the month and spending was down 0.2 per cent and 0.3 per cent respectively.

New South Wales experienced the strongest growth (up 0.9 per cent); followed by Queensland, Victoria and Western Australia (all up by 0.7 per cent); South Australia (up by 0.6 per cent) and Tasmania (up 0.1 per cent).

In annual terms, all states and territories have stronger sales than a year ago. 

Find out more about the latest Commonwealth Bank Business Sales Indicator.

About the Commonwealth Bank Business Sales Indicator

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.