Sales across Australia rose by 0.3 per cent in trend terms in December, according to the Commonwealth Bank’s latest Business Sales Indicator (BSI).
Although many businesses experienced an increase in sales, the rate of growth has narrowed to the slowest rate in just over two years in trend terms, fitting an overall pattern of sales growth in recent months.
Craig James, Chief Economist at the Bank’s broking subsidiary CommSec and author of the BSI report, said that although the growth rate slowed further in December, there are encouraging signs that consumer confidence will pick-up in 2015.
“Despite the slowdown in spending growth over the festive period, the latest unemployment data reflects a strengthening employment market, which has the potential to drive spending as we move further into 2015,” said Mr James.
“For business owners, the start of the New Year is the opportune time to revisit goals and ensure they are planning ahead for potential variations in spending and proactively managing business cash flow.”
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.
In annual terms, the BSI grew by 7.7 per cent in December, the slowest growth in 17 months.
Across industries, spending rose in 13 of the 19 sectors in trend terms. The strongest performers in December were Service Providers (up 2.3 per cent); Amusement & Entertainment (up 1.8 per cent); and Hotels & Motels (up 1.4 per cent).
The biggest falls were recorded in Mail Order/Telephone Order Providers (down 4.4 per cent); Business Services (down 3.0 per cent); and Professional Services & Membership Organisations (down 1.0 per cent).
State by state analysis
Strong sales increases were recorded in trend terms in the ACT (up 1.8 per cent), Western Australia (up 0.5 per cent) and Tasmania (up 0.3 per cent), while sales in Queensland remained unchanged.
The trend BSI has risen for 41 straight months in Queensland before its flat result in December, while Tasmania has seen sales rise for 33 consecutive months.
Spending fell significantly in New South Wales (down 1.8 per cent), and contractions were seen in South Australia (down 0.6 per cent), Northern Territory (down 0.5 per cent) and Victoria (down 0.2 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.
- It should be noted that the BSI data has been revised in December to account for changes in the composition of the businesses covered
- 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.