Economy-wide spending rose 0.5 per cent in January, according to the latest Business Sales Indicator (BSI) released by the Commonwealth Bank today.
The report, a key monthly indicator of the state of the local economy, shows that annual trend growth in sales remains strong at 5.8 per cent – the fastest growth in almost a year.
“While we’re seeing growth slow from the highs of the past two months, January spending was still ahead of the long-term average monthly growth pace of 0.4 per cent,” said CommSec Chief Economist Craig James.
“Spending growth is clearly consolidating, and these figures show a solid start to the new year. Consumer confidence remains high, interest rates remain low, and local businesses should remain optimistic about the coming 12 months.”
During 2016, sales grew at an average monthly trend pace of 0.5 per cent and similar growth was recorded in the first month of 2017.
The more volatile seasonally adjusted BSI fell by 0.2 per cent in January after falling by 1.5 per cent in December and rising by 3.8 per cent in November.
Overall, 16 of the 19 industry sectors analysed posted higher sales in trend terms in January. Sales in Retail Stores fell by 0.7 per cent while spending at Amusement and Entertainment businesses fell 0.2 per cent and Mail Order/Telephone Order Providers fell by 2.3 per cent.
On the other side of the equation, one of the strongest gains in sales occurred in Automobiles and Vehicles (up 2.1 per cent). In the Service Providers sector, spending rose by 1.9 per cent in January after a 2.3 per cent gain in December.
Other notable trend increases in sales occurred in Hotels & Motels (up 1.4 per cent), Government Services (up 1.3 per cent) and Business Services (up 1.1 per cent).
Sectors with strongest annual growth in January included Government Services (up 16.4 per cent), Hotels and Motels (up 16.2 per cent) and Automobiles and Vehicles and Wholesale Distributors and Manufacturers (both up 12.1 per cent).
Only two of the 19 industry sectors recorded weaker sales in annual terms: Mail Order/Telephone Order Providers and Retail Stores.
State by state breakdown
Sales were stronger in all states and territories last month, with the Australian Capital Territory and Tasmania seeing the strongest gains across the country at 1.1 per cent. They were followed by Queensland (up 0.8 per cent), Western Australia (up 0.7 per cent), South Australia and New South Wales (both up 0.6 per cent), Northern Territory (up 0.2 per cent) and Victoria (up by less than 0.1 per cent).
Spending has consistently increased in Queensland for 69 months, for 68 months in Western Australia and for 66 months in South Australia.
In annual terms all states and territories had sales above a year ago. Strongest growth was the Australian Capital Territory (up 10.7 per cent), followed by South Australia (up 9.9 per cent), Western Australia (up 8.3 per cent), Queensland (up 7.6 per cent) Tasmania (up 7.0 per cent), New South Wales (up 6.7 per cent), Northern Territory (up 1.3 per cent) and Victoria (up 0.7 per cent).
The BSI tracks the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals. The BSI covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines.
Click here for more information or to request 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.