Australia-wide spending lifted by 0.4 per cent in October after a similar rise in September and delivered the biggest back-to-back increase in nine months, according to the Commonwealth Bank’s Business Sales Indicator (BSI) released today.
The monthly report, tracking the value of credit and debit card transactions, demonstrates the continued bounce back of economy-wide spending after subdued sales throughout early 2016.
“The latest data paints a positive picture for Australian businesses as we move into the Christmas spending period, showing continued recovery in spending following uncertainty around Brexit and the Federal and US elections,” said CommSec Chief Economist Craig James.
“Spending slowed from December 2015 through to April 2016. But in an environment of improved certainty, low interest rates and consumer confidence, we’re now seeing spending expand at faster than the average monthly rate over the past decade.”
Growth was strongest in New South Wales, Western Australia and the Australian Capital Territory, and in industry sectors such as Amusement and Entertainment and Government Services.
The seasonally adjusted BSI fell by 0.6 per cent in October, after lifting by 0.4 per cent in September and rising 0.9 per cent in August.
“It’s clear that the US election influenced consumer and business spending during October. Now that the result is resolved, we’re seeing a positive response from financial markets and expect growth in spending to lift through to Christmas,” said James.
Industry analysis
Spending rose across 13 of the 19 sectors in October in trend terms. The Government Services sector saw its strongest back-to-back gain in almost three years, rising 2.9 per cent in October after a 2.6 per cent gain in September.
Growth was also led by the experience economy, with the Amusement and Entertainment sector up 2.5 per cent in October after a 2.7 per cent gain in September.
The Transport sector had the largest fall, down 1.2 per cent in October and the sixth straight decline.
In terms of annual growth, sector highlights included Hotels and Motels (up 15.5 per cent), Wholesale Distributors and Manufacturers (up 12.2 per cent) and Mail Order and Telephone Order Providers (up 11.4 per cent).
Only four industry sectors contracted in annual terms: Retail Stores, Transportation, Business Services, and Automobiles and Vehicles.
State-by-state analysis
New South Wales saw the strongest increase in sales across all states and territories with a 0.8 per cent rise for the month of October.
The state was followed by the Australian Capital Territory and Western Australia (both up 0.6 per cent), Queensland (up 0.4 per cent), South Australia (up 0.3 per cent), Northern Territory (up 0.2 per cent) and Victoria (up by less than 0.1 per cent). Sales fell 0.1 per cent in Tasmania.
In annual terms, all states and territories have stronger sales than a year ago with the strongest growth seen in South Australia (up 7.0 per cent).
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.
Find out more and download a copy of the latest Commonwealth Bank Business Sales Indicator here.
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.