- Economy-wide spending grew for the 18th straight month in February, although at a slower pace.
- Sales rose in every state or territory, except the Australian Capital Territory.
- Queensland led the nation with a 1.1 per cent rise.
- 17 of 19 industry sectors saw sales increase, with Transportation again the best-performer.
Economy-wide spending grew once again in February, according to the Commonwealth Bank’s latestBusiness Sales Indicator (BSI). In trend terms, the BSI rose 0.7 per cent for the month, the 18th consecutive month of spending growth.
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. February’s BSI shows growth easing to a more sustainable pace after strong rises over the last four months, with the annual growth rate falling to 10.4 per cent, down from a six-year high of 10.8 per cent in January.
The more volatile seasonally adjusted measure fell 0.3 per cent in February, after a 2.2 per cent rise in January. That saw the seasonally adjusted annual growth rate dip to 10.7 per cent, down from 11.9 per cent the month before.
“This is another positive result, with spending growth consolidating at a pace slightly above the long-term average. Despite the slight slowdown in February, it shows that overall business conditions remain generally upbeat,” said Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank.
“For business owners looking to manage month-to-month sales fluctuations and capitalise on future growth, it’s essential to maintain strong cash flow management disciplines,” said Mr Bennett.
Craig James, Chief Economist at the Bank’s broking subsidiary CommSec and author of the BSI, said that despite some areas of weakness, the outlook is generally positive.
“The Australian economy posted higher than expected GDP growth in the December quarter, with more than 60,000 new jobs created in the first two months of 2014. The recent half yearly profit reporting season shows Australian companies are enjoying extremely strong profit growth, ,” said Mr James
“Although we are still rebalancing from a mining-led economy to an economy with a more diversified growth profile, there are good reasons to be optimistic as we enter a record 23rd year of uninterrupted growth,” said Mr James.
Transport in the lead
Across 19 industry sectors, 17 enjoyed higher sales in trend terms during February. Transport led the way for the sixth month in a row, with spending up another 2.0 per cent. Other strong performers include Amusement & Entertainment (up 1.9 per cent) and Hotels & Motels (up 1.7 per cent).
In contrast, the Professional Services & Membership sector saw sales decline for the sixth consecutive month, with a dip of 0.1 per cent. The Airlines industry was the other sector which declined during the month.
In annual terms, the Amusement & Entertainment sector maintained its dominance, with spending up almost 50 per cent in trend terms over the past 12 months.
Queensland spending growth surges
Sales for February rose in seven of the eight states and territories, with Queensland enjoying the highest growth rate at 1.1 per cent in trend terms. Western Australia and Tasmania were close behind, with increases of 0.9 per cent and 0.8 per cent respectively.
Many states have now enjoyed long periods of growth, with the trend BSI rising for 33 straight months in the Northern Territory, 31 months in South Australia and 24 months in Tasmania.
The Australian Capital Territory was the only state or territory to experience falling sales in February, with a record drop of 6.2 per cent. That saw the Territory become the only region with negative annual spending growth, recording a 15.7 per cent fall in the year to February 2014.
Meanwhile, South Australia continues to lead the nation in annual growth, with sales up 31.3 per cent over the year.
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.