- Economy-wide spending grew by 0.4 per cent in July, extending the period of rising sales across the nation to three years.
- Seasonally adjusted, sales grew by 1.7 per cent in July. Annual sales growth lifted from 8.1 per cent in June to 11.8 per cent in July.
- Four of the 19 industry sectors contracted in trend terms in July, a similar result to June. Sales fell in two states and territories in July.
The economy continues to send out mixed messages about its overall health, with spending continuing to increase, but at a decreasing rate, according to the Commonwealth Bank’s latest Business Sales Indicator (BSI).
Spending across the economy increased in July by 0.4 per cent. In annual terms, the BSI was up by 9.3 per cent on a year earlier, representing the slowest growth in 10 months. However, this figure still exceeds the 6.2 per cent average annual growth rate of sales over the past decade.
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. The Commonwealth Bank handles around 30 per cent of all Australian merchant credit and debit transactions. The BSI covers spending broadly across the economy, including retail sales, automobiles, personal services, business services and airlines.
Across 19 different industry sectors, spending in July increased in all but four sectors. The strongest growth came from Mail Order/Telephone Order Providers, which saw a 4.6 per cent rise for the month, reflecting the continuing trend towards virtual shopfronts. Other areas to grow included Miscellaneous Stores (up 1.0 per cent), Hotels & Motels (up 0.8 per cent), and Retail Stores (up 0.8 per cent). Spending declined in Utilities (down 1.9 per cent), Clothing Stores (down 1.9 per cent), Business Services (down 0.2 per cent), and Automobile/Vehicle Rentals (down 0.4 per cent).
Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank, said while the July BSI reported modest growth, it was the 36th consecutive month in which spending had increased.
“We have had three years of spending growth in the economy, supporting a recent reported increase in business confidence. In every State or Territory, except the ACT, sales are higher now than they were 12 months ago.
“These are good conditions for business investment with stable interest rate settings and a fairly benign outlook for inflation. In light of this, it is a good time for business owners to review their growth plans,” Mr Bennett said.
Craig James, Chief Economist at the bank’s broking subsidiary CommSec and author of the BSI report, said the modest growth in spending was in contrast to the more volatile seasonally adjusted estimate of spending, which rose by 1.7 per cent in July, the strongest lift in six months.
“Business confidence and conditions have improved markedly over the past year and increasing profitability should result in more employment. More people in jobs should result in higher consumer confidence and that will show up in increased spending,” Mr James said.
“Meanwhile, the Reserve Bank is in no rush to lift interest rates. Inflation remains well contained, while the increase in the unemployment rate and the underlying high value of the Aussie dollar slows any rebalancing in the economy.
“Smart businesses are seeing opportunities in the current environment but there are still plenty of risk-averse businesses happy to stay on the sidelines,” he said.