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Media Release

Commonwealth Bank BSI shows economy-wide spending still subdued

BSI shows economy-wide spending still subdued

The Commonwealth Bank BSI increased by 0.1 per cent in June.

The nation’s leading analysis on monthly business performance shows that spending remained flat in the four weeks immediately before the Federal election, continuing a pattern for the year so far.

The Commonwealth Bank Business Sales Indicator (BSI), a measure of economy-wide spending, rose slightly by 0.1 per cent in June off the back of strong spending in clothing stores.

The more volatile seasonally adjusted BSI rose by 1.7 per cent in June after a 1.5 per cent fall in May and a 2 per cent rise in April.

This month’s BSI reveals that annual growth of spending eased from 4.6 per cent to 4.3 per cent – the weakest annual growth in four years. Previously the annual growth rate had held at 7.0 to 7.6 per cent between April and November 2015.

In June sales rose in five of the eight states and territories, and at a sectoral level 14 of the 19 industry sectors analysed expanded in trend terms last month.

Craig James, Chief Economist, CommSec said it is clear that economy-wide spending growth has slowed.

“Economy wide spending lifted by an average of 0.1 per cent in trend terms in the first six months of 2016, compared with 0.5 per cent over 2015, but with increasingly positive signs throughout the economy the BSI could bounce back to usual growth levels soon,” he said.

“This month’s data was collected throughout the final weeks of the federal election campaign, which are normally periods of subdued spending. It will be interesting to see whether the election result helps to increase spending in the economy.”

Industry analysis

Only five of the 19 industry sectors analysed fell in trend terms in June: Amusement & Entertainment; Government Services; Hotels & Motels; Service Provides; and Contracted Services.

Spending by Government Services fell by 1.8 per cent, the biggest fall in 15 months.

One of the strongest gains occurred in Clothing Stores with spending up 1.2 per cent in trend terms in June, following a 1.3 per cent lift in May – the sector’s best back to back growth in four and a half years.  

In annual terms four of the 19 industry sectors contracted including: Airlines, Retail Stores, Amusement & Entertainment and Automobiles & Vehicles.

Sectors with strongest annual growth in June included: Hotels & Motels (up 14.6 per cent); Miscellaneous Stores (up 10.2 per cent); and Government Services (up 9.0 per cent).

State-by-state analysis

Across the states and territories in June sales only fell in the Northern Territory (down by 0.5 per cent), and the ACT (down 0.1 per cent).

South Australia recorded the strongest increase in spending (up 0.6 per cent) followed by Western Australia (up 0.3 per cent), Queensland (up 0.2 per cent) and Victoria and Tasmania (both up 0.1 per cent). Sales in NSW were flat in June.

In annual terms only Victoria had a dip in sales (down 1.4 per cent). Tasmania had the biggest annual growth (up 8.8 per cent), beating the ACT (up 7.2 per cent), NSW (up 7.1 per cent), South Australia (up 6.2 per cent), Western Australia (up 6.0 per cent), the Northern Territory (up 4.6 per cent) and Queensland (up 4.4 per cent).

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 via the SEASABS statistical program from the Australian Bureau of Statistics.

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 (IMCC) categories. MCC is a four-digit number assigned to a business when the business first starts accepting cards as a form of payment.