The Commonwealth Bank Business Sales Indicator (BSI) – a measure of economy-wide spending – fell slightly in May, driven by weaker spending in the Government and Business Services sectors.
The BSI fell by 0.1 per cent in May after a similar decline in April and a flat result in March. Sales had previously grown between March 2015 and February 2016.
Annual growth slowed from 4.9 per cent to 4.1 per cent in May. The annual growth rate had held at above-normal levels of between 7.0 and 7.6 per cent between November 2015 and April this year.
The more volatile seasonally adjusted BSI fell by 1.6 per cent in May after rising by 1.9 per cent in April and falling by 0.8 per cent in March.
At a sectoral level, 14 of the 19 industry sectors expanded in trend terms in May, a similar result to April, and sales rose in five of the eight states and territories.
Craig James, Chief Economist, CommSec, said analysis had been complicated in recent months with the extra day in February and an early Easter, but it is clear that economy-wide spending growth has slowed.
“Before March, spending had grown for 15 straight months. The May data confirms a slowdown in economy-wide spending as the Australian economy continues its transition after the mining boom, and consumers and businesses await the outcome of the election on 2 July.
“While spending has been modest so far this year, the fundamentals of the Australian economy remain strong. With record low interest rates, good employment figures and sound consumer and business confidence, the BSI is expected to show a return to growth later in 2016,” Mr James said.
Across sectors, only five of the 19 industry sectors fell in trend terms in May: Automobiles & Vehicles; Business Services; Amusement & Entertainment; Retail Stores, and Government Services, the latter of which had its biggest fall in over a year, declining by 1.5 per cent.
The strongest growth occurred in Personal Service Providers (e.g. Dry Cleaners, Hairdressing, Photographic Studios) with spending up 0.6 per cent in trend terms in May, the 45th consecutive monthly gain. Spending at Repair Services also rose by 0.6 per cent, the 27th straight monthly gain.
Sectors with strongest annual growth in May included: Hotels & Motels (up 14.6 per cent); Miscellaneous Stores (up 10.2 per cent); and Government Services (up 9.0 per cent despite the month-on-month decline).
Across the states and territories, sales in May fell in the Northern Territory (down by 0.8 per cent), Victoria (down by 0.6 per cent) and NSW (down by 0.2 per cent).
Of the other states and territories, the strongest was South Australia (up 0.5 per cent) followed ACT (up 0.3 per cent), Western Australia and Queensland (both up by 0.2 per cent) and Tasmania (up 0.1 per cent).
In annual terms only Victoria had sales below a year ago (down 2.5 per cent). The strongest growth was in Tasmania (up 10.1 per cent), followed by the ACT (up 8.5 per cent), NSW (up 7.2 per cent), Western Australia (up 6.0 per cent), South Australia (up 5.7 per cent), the Northern Territory (up 4.7 per cent) and Queensland (up 4.6 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 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.